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EX-31.1 - CERTIFICATION - First Liberty Power Corpex311.htm
EX-31.2 - CERTIFICATION - First Liberty Power Corpex312.htm
EX-32.1 - CERTIFICATION - First Liberty Power Corpex321.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the fiscal year ended July 31, 2012
   
[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the transition period from __________ to __________

000-52928
Commission File Number
 
FIRST LIBERTY POWER CORP.
(Exact name of registrant as specified in its charter)
   
Nevada
90-0748351
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
   
7251 W. Lake Mead Blvd, Suite 300, Las Vegas, NV
89128
(Address of principal executive offices)
(Zip Code)
 
(702) 675-1196
(Registrant’s  telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:
 
Title of each class
Name of each exchange on which registered
n/a
n/a

Securities registered pursuant to Section 12(g) of the Exchange Act:
 
Common Stock
Title of  class

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 
Yes
[   ]
No
[X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

 
Yes
[   ]
No
[X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 
Yes
[X]
No
[   ]

 
1

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 
Yes
[   ]
No
[   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

 
Yes
[   ]
No
[X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
[   ]
Accelerated filer
[   ]
       
Non-accelerated filer
[   ]
Smaller reporting company
[X]
(Do not check if a smaller reporting company)
     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 
Yes
[  ]
No
[X]

The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant was approximately $1,502,073 (based on 37,551,834 shares held by non-affiliates and an April 30, 2012 closing market price of $0.04 per share) as of April 30, 2012, the last business day of the registrant’s most recently completed third quarter, assuming solely for the purpose of this calculation that all directors, officers and greater than 10% stockholders of the registrant are affiliates. The determination of affiliate status for this purpose is not necessarily conclusive for any other purpose.
 
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST 5 YEARS:

Indicate by check mark whether the issuer has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 
Yes
[   ]
No
[   ]
 
APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

 
166,808,870 shares of common stock issued and outstanding as of November 13, 2012
 

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g. Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes. 

 
None
 


 
 

 

TABLE OF CONTENTS

   
Page
 
PART I
 
     
Item 1
Business
  4
Item 1A
Risk Factors
  7
Item 1B
Unresolved Staff Comments
  7
Item 2
Properties
  7
Item 3
Legal Proceedings
  16
Item 4
Mine Safety Disclosures
  16
     
 
PART II
 
     
Item 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  17
Item 6
Selected Financial Data
  19
Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  19
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
  21
Item 8
Financial Statements and Supplementary Data
  22
   
F-1 to F-20
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  23
Item 9A(T)
Controls and Procedures
  23
Item 9B
Other Information
  24
     
 
PART III
 
     
Item 10
Directors, Executive Officers and Corporate Governance
  25
Item 11
Executive Compensation
  27
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  29
Item 13
Certain Relationships and Related Transactions, and Director Independence
  30
Item 14
Principal Accounting Fees and Services
  30
     
 
PART IV
 
     
Item 15
Exhibits, Financial Statement Schedules
  31
     
 
SIGNATURES
  32

 
3

 

ITEM 1.  BUSINESS

Forward Looking Statements

This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

These risks include, by way of example and not in limitation:

 
·
the uncertainty that we will not be able to successfully identify commercially viable resources on our exploration properties;
 
·
risks related to the large number of established and well-financed entities that are actively competing for limited resources within the mineral property exploration field;
 
·
risks related to the failure to successfully manage or achieve growth of our business if we are successful in identifying a viable mineral resource, and;
 
·
other risks and uncertainties related to our business strategy.

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements.  These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

The safe harbors of forward-looking statements provided by Section 21E of the Exchange Act are unavailable to issuers of penny stock. As we issued securities at a price below $5.00 per share, our shares are considered penny stock and such safe harbors set forth under the Private Securities Litigation Reform Act of 1995 are unavailable to us.

Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to the common shares in our capital stock.

As used in this Annual Report, the terms "we," "us," “Company,” "our" and "First Liberty" mean First Liberty Power Corp., unless otherwise indicated.

Corporate Information

The address of our principal executive office is 7251 W. Lake Mead Blvd, Suite 300, Las Vegas, Nevada, 89128.  Our telephone number is 702-675-8198.

Our common stock is quoted on the OTC QB under the symbol "FLPC".


 
4

 

We were incorporated in the State of Nevada under the name “Quuibus Technology, Inc.” on March 28, 2007, to engage in the business of developing and offering a server-based software product for the creation of wireless communities.  Due to an inability to commence viable operations in the software production industry, new management of the Company began to evaluate various business alternatives available to us.

In accordance with approval by the Board of Directors, effective December 22, 2009, the Nevada Secretary of State effected a forward stock split of our authorized and issued and outstanding shares of common stock on a one (1) old for 27 new basis, such that our authorized capital increased from 20,000,000 shares of common stock with par value of $0.001 to 540,000,000 shares of common stock with a par value of $0.001 and, correspondingly, our issued and outstanding shares of common stock increased from 2,525,000 shares of common stock to 68,175,000 shares of common stock.  Also, effective December 22, 2009, we changed our name from “Quuibus Technology, Inc.” to “First Liberty Power Corp.” by way of a merger with our wholly owned subsidiary First Liberty Power Corp. which was formed solely for the purpose of the change of name.  The change of name and forward stock split became effective with the Over-the-Counter Bulletin Board at the opening for trading on February 4, 2010, under the new stock symbol “FLPC”.  The change of name was effected to better reflect the new business direction of our company.

We do not have any subsidiaries.

Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.
 
Our Current Business

We are an exploration stage company engaged in the exploration of mineral properties.

On December 24, 2009, we entered into two purchase agreements with GeoXplor Corp. (“GeoXplor”). Under the agreements, we have been granted an exclusive exploration license in regards to the mineral properties described in the agreements. One agreement is in regards to claims located in Esmeralda County, Nevada, for Lithium and Lithium Carbonate exploration (the "Lithium Agreement"), and one agreement is in regards to claims located in San Juan County, Utah, for Vanadium and Uranium exploration (the "Van-Ur Agreement").

On February 3, 2011, we entered into and closed a property acquisition and exploration rights agreements with New America Energy Corp. (“NECA”) for the claims identified within the Van-Ur Agreement, under which we retained certain residual and recovery rights to the claims. Certain payments due to the Company on June 3, 2011 were not paid, and on August 1, 2011, with an effective date of May 31, 2011, the parties executed an extension to the agreement, extending due dates through to October 3, 2011.  The outstanding payments were not  delivered by NECA, and we did not then exercise our rights to recovery under the agreements, therefore the claims fully reverted back to GeoXplor Corp.

On May 31, 2012, we entered into a purchase agreement with GeoXplor Corp. (“Lithium Agreement”). Under this Lithium Agreement, we have been granted an exclusive four year exploration license in regards to the two mineral properties described in the Lithium Agreement. One property encompasses 58 placer claims (9280 acres) located in Lida Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Lida Valley Property"), and the other encompasses 70 placer claims (11,200 acres) located in Smokey Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Smokey Valley Property"). The Lida Valley Property encompasses claims previously included in agreements between the Company and GeoXplor, specifically the Purchase agreement between the Company and GeoXplor dated December 24, 2009.  This Agreement supersedes and replaces all prior agreements in respect to those claims.

The claims identified in the Lithium Agreement are situated on undeveloped raw land.  We have undertaken exploration on these claims, and intend to undertake further exploration in the expectation of finding commercially viable deposits of Lithium / Lithium Carbonate.  This will continue to be our principal activity, until and if our minerals of interest are discovered in commercially viable quantities, which would then become our principal products.

 
5

 


Our exploration program will be exploratory in nature and there is no assurance that a commercially viable mineral deposit, a reserve, exists until further exploration, particularly drilling, is undertaken and a comprehensive evaluation concludes economic and legal feasibility. We have not yet generated or realized any revenues from our business operations.

Should we be successful in raising sufficient funds in order to conduct our additional exploration programs, the full extent and cost of which is not presently known beyond that required by our proposed drilling program and mandatory work programs as noted below, and such exploration programs results in an indication that production of our minerals of interest is economically feasible, then at that point in time we would make a determination as to the best and most viable approach for mineral extraction.

As all of our minerals of interest are commodity products, they are expected to be readily saleable on an open market at then current prices, therefore we foresee no direct competition per se for the selling of our products, should we ever reach the production stage.  However, we would be competing with numerous other companies in the region, in the state of Nevada, in the country, and globally, for the equipment, manpower, geological expertise, and capital, required to fund, explore, develop, extract, and distribute such minerals.

Our mineral exploration programs are subject to State and Federal regulations, which sets forth rules for: locating claims, posting claims, working claims and reporting work performed. We are also subject to rules on how and where we can explore for minerals. We must comply with these laws to operate our business. Compliance with these rules and regulations will not adversely affect our operations.  We are also subject to the numerous laws for the environmental protection of forests, lakes and rivers, fisheries, wild life etc. These codes deal with environmental matters relating to the exploration and development of mining properties. We are responsible to provide a safe working environment, not disrupt archaeological sites, and conduct our activities to prevent unnecessary damage to the property.

We will secure all necessary permits for exploration and, if development is warranted on the properties, will file final plans of operation before we start any mining operations. We anticipate no discharge of water into active stream, creek, river, lake or any other body of water regulated by environmental law or regulation. No endangered species will be disturbed. Restoration of the disturbed land will be completed according to law. All holes, pits and shafts will be sealed upon abandonment of the property. It is difficult to estimate the cost of compliance with the environmental law since the full nature and extent of our proposed activities cannot be determined until we start our operations and know what that will involve from an environmental standpoint.  We are in compliance with all regulations at present and will continue to comply in the future. We believe that compliance with these regulations will not adversely affect our business operations in the future.

We intend to subcontract exploration work out to third parties, which are identified below in our more detailed discussions.  We intend to use the services of subcontractors for manual labor exploration work.

Employees

We have not entered into employment agreements with the officers or directors of the Company.

However, in order to undertake the administrative and management operations of the Company, the Company has entered into consulting agreements to provide required services to the Company, with the particulars as follows.

 
·
On March 1, 2010, the Company entered into a consulting agreement with Mr. John Rud, wherein Mr. Rud has agreed to provide, among other things, consulting services to the Company for a period of 12 months.  By mutual consent, this agreement was extended for an additional year under the same terms and conditions.  Mr. Rud resigned as a director in November 2011, and his agreement has ended.
 
·
On May 3, 2010, we entered into a consulting agreement with Mr. John Hoak, wherein Mr. Hoak has agreed to provide, among other things, consulting services to the Company. The agreement was effective March 24, 2010 and continued to March 24, 2012. Mr. Hoak resigned as a director in March 2012, and his agreement has ended
 
·
On December 4, 2009, Mr. Glynn Garner was appointed President, Secretary, Treasurer, and a member of the board of directors of the Company.  Mr. Garner did not enter into any formal employment or consulting agreement at the time.  Mr. Garner resigned all of his officer and director positions on December 28, 2010, effective January 1, 2011.
 
·
On November 29, 2010, Mr. Don Nicholson was appointed as a member of the board of directors of the Company, and on December 28, 2010, effective January 1, 2011; Mr. Nicholson was appointed Chief Executive Officer, President, and Secretary-Treasurer. The services of Mr. Nicholson are provided to the Company through an agreement with LTV International Holdings Ltd., for which company Mr. Nicholson provides consulting service, as entered into on July 2, 2011, effective November 15, 2010.

 
6

 
 
 
·
Effective April 1, 2012, we entered into a consulting agreement with Robert B. Reynolds Jr., wherein Mr. Reynolds has agreed to provide, among other things, consulting services to the Company for a period of 12 months.

Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K. and all amendments to those reports that we file with the Securities and Exchange Commission, or SEC, are available at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding reporting companies.

ITEM 1A.  RISK FACTORS

As a “smaller reporting company”, we are not required to provide the information required by this Item.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

ITEM 2.   PROPERTIES

Executive Offices

The address of our principal executive office is 7251 W. Lake Mead Blvd, Suite 300, Las Vegas, Nevada, 89128.  Our telephone number is 702-675-8198.

Mineral Properties

Lida Valley Property

A) Lithium Agreement:

Claims

On May 31, 2012, we entered into a purchase agreement with GeoXplor Corp. (“Lithium Agreement”). Under this Lithium Agreement, we have been granted an exclusive four year exploration license in regards to the two mineral properties described in the Lithium Agreement. One property encompasses 58 placer claims (9280 acres) located in Lida Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Lida Valley Property"), and the other encompasses 70 placer claims (11,200 acres) located in Smokey Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Smokey Valley Property"). These requirements apply to both the Lida Valley Property and the Smokey Valley Property, and the Work Program requirements may be allocated to the respective properties at the discretion of the Company.  The Lida Valley Property encompasses claims previously included in agreements between the Company and GeoXplor, specifically the Purchase agreement between the Company and GeoXplor dated December 24, 2009.  This Agreement supersedes and replaces all prior agreements in respect to those claims.

A Under the Lithium Agreement, the Company is required to:

Make Cash Payments - First Liberty shall pay GeoXplor in consideration of the grant of the exploration license and other rights granted under this Agreement a total of $725,000, according to the following schedule:

 
(1)
Twenty-Five Thousand Dollars ($25,000.00) within 5 days of the execution of this agreement;

 
(2)
One-hundred Thousand Dollars ($100,000.00) to GeoXplor on or before December 31, 2012;

 
7

 
 
 
(3)
Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2013;

 
(4)
Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2014;

 
(5)
Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2015;

Stock Issuance – As additional consideration, the Purchase Price shall include the issuance of 2,000,000 Shares, subject to such conditions as may be imposed by the rules and regulations of the United States Securities and Exchange Commission, as follows:

 
(1)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2012;

 
(2)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2013;

 
(3)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2014;

 
(4)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2015;

Work Commitment – First Liberty shall expend not less than One Million Five-Hundred Thousand Dollars ($1,500,000) in Mineral Exploration and Development Testing ("Work"). The Work shall be scheduled according to the following schedule:

 
(1)
One Hundred Thousand Dollars ($100,000.00) on or before November 15, 2012;

 
(2)
Four-hundred Thousand Dollars ($400,000.00) on or before December 31, 2012;

 
(3)
Five-hundred Thousand Dollars ($500,000.00) on or before December 31, 2013;

 
(4)
Five-hundred Thousand Dollars ($500,000.00) on or before December 31, 2014;

Conditions for Transfer of Title and Subsequent Limitations

 
(1)
At such time as the First Liberty has completed the required payments, work program and stock transfers, the Properties shall be transferred to First Liberty by Quitclaim Deed.

 
(2)
Concurrently with the transfer of title to First Liberty, First Liberty shall convey to GeoXplor a “Net Value Royalty” on production of lithium carbonate and other lithium minerals from the Properties measured by five percent (5%) of the gross proceeds received by the First Liberty from the sale or other disposition of lithium carbonate or other lithium compounds less (i) transportation of the product from the place of treatment to the purchaser, (ii) all handling and insurance charges associated with the transportation, and (iii) any taxes associated with the sale or disposition of the product (excluding any income taxes of First Liberty). First Liberty shall have the further right to purchase up to four percent (4%) of the Net Value Royalty, in whole percentage points, for One Million Dollars ($1,000,000) for each one percent (1%).

 
(3)
If First Liberty, its assignee or a joint venture including First Liberty, (i) delivers to its Board of Directors or applicable other management a feasibility study recommending mining of lithium carbonate or other lithium compound from the Properties and such Board of management authorizes implementation of a mining plan, or (ii) sells, options, assigns, disposes or otherwise alienates all or a portion of its interest in the Properties, First Liberty shall pay GeoXplor an additional bonus of Five Hundred Thousand Dollars ($500,000) in cash or Shares of First Liberty.  The election to obtain cash or shares of First Liberty shall be at the sole election of GeoXplor.

 
8

 
Lida Valley Claims, Esmeralda County, NV
 
Location and Access

The Lida Valley Property is located in South Western Nevada, approximately 150 miles north of Las Vegas and within 15 miles of the Montezuma peak. The project area has excellent infrastructure including a network of roads, railroads and cellular telephone coverage.

Regional & Property Geology

Lida Valley is one of a group of inter-mountain basins in west-central Nevada and is surrounded by Cuprite Hills to the Northwest, Stonewall Mountains to the East and Slate Ridge to the Southwest. It has a playa floor of about 12 square miles that receives surface drainage from an area of about 60 square miles. The playa floor contains erosion remnants of Lithium-rich rhyolite tuff and is surrounded by alluvial fan slopes of the mountain ranges. Altitudes range from 4,630 feet on the playa floor to 7,000 feet on the Stonewall Ridge.
 
The tertiary volcanic rocks are considered to be involved in the origin of the Lithium deposits in south-central Nevada. The volcanism that created the volcanic rocks also provided the heat energy and hydrothermal activity required to mobilize the Lithium from volcanic glass and other relatively unstable minerals. The Tertiary rhyolites from the Montezuma Range and surrounding mountain ranges are considered to be the most lithium rich rhyolites in the world, (MacDonald et. Al; 1992) Transport of the Lithium would require a hydrothermal fluid, surface water or meteoric groundwater. Evaporation concentrated the Lithium in the brine to economic grades which are considered to be in the 100 to 300 ppm range. The Lithium rich water would also alter the playa sediments to form Lithium-rich clays and Lithium rich inclusions in halite.

Exploration

In March of 2010, the Company commissioned a gravity survey on the Lida Valley Property, total cost of $85,287, undertaken by Hasbrouck Geophysics, Inc. of Prescott, Arizona, which report was completed in June 2010.  The gravity survey was conducted for lithium brine exploration over claims Lida Valley Property. The purpose of the survey was to map depth to bedrock or thickness of sediments, map any geologic structures that may be significant to the occurrence of lithium brine, and provide information for the selection and design of additional geophysical surveys.

Interpretation of the modeled gravity data indicates several areas with increased bedrock depths or lower bedrock elevations. These areas may be conducive for concentration of lithium-bearing brines, but the presence, dip and continuity of aquifer beds plus the detailed mapping of any structures both within the sedimentary section and bedrock should be determined through high resolution geophysical means prior to drilling.

In order to further detail on the above gravity survey, a 2nd gravity survey was commissioned for a cost of $22,000, which was completed in August 2010.

Based on the positive indicators found from the two gravity survey reports, two geophysical approaches were recommended in areas selected from the gravity surveys: 1) controlled-source audiomagnetotellurics / magnetotellurics (CSAMT/MT) surveys, and 2) reflection seismic surveys. It was recommended that the CSAMT/MT surveys be conducted because they will determine if conductive zones, possibly indicative of lithium-bearing brines, are present and continuous. Additionally these surveys may help define aquifer dip.

Based on the above recommendation, the Company engaged GeoXplor, in association with Hasbrouck Geophysics, Inc., to undertake the CSAMT/MT surveys.  The work was completed and a report provided to the Company in February 2011, for a total cost of $112,500.  As with the previous two geophysical surveys conducted, the results were positive, and include having identified areas of potential lithium brine deposits. The mapping indicated a geologic stratigraphy and structure relative to the occurrence of lithium brine, and identified conductors that are thought to be representative of lithium-bearing brine, thus providing information for the selection and design of additional geophysical surveys or the identification of drilling locations.


 
9

 



Collectively, the three reports show several clear targets for further exploratory investigations. Drilling targets in both the southern end of the Property and in the northern area of the playa have been located based on the identification of several areas showing areas of low resistivity. The complete reports from Hasbrouck Geophysics from all exploration stages on the Property are currently available at the Company’s website, www.firstlibertystrategic.com.

Based on these results, in May 2011, the Company determined that the best and most efficient approach is to bypass seismic surveys, and proceed directly to a 3 – 5 hole drilling program, and therefore requested a work program estimate from GeoXplor, which has now been presented to the Company in October 2011.  The drill program, estimated at 3000m total, will target areas of significant Lithium brine potential identified by the Company's exploration program (i.e., areas marked by gravity lows and low resistivity) through certain initial holes followed by the remaining holes depending on first results. By penetrating the formations comprising the basin fill in the Lida Valley Property, the drill results will allow the Company to identify the concentration, if any, of Lithium and other constituents in the groundwater in these target zones. GeoXplor Corp., who will perform the drilling, estimates that each hole will require one week's time, with a budgeted cost of $343,000.

The Company is required to undertake a combined total of approximately $1,500,000 worth of work on the Lida Valley Property and Smokey Valley Property prior to December 2014.  The next steps for exploration, over the next year, are expected to be the drill program as indicated above.  If the results are positive for the drill program, we will base our next phase exploration program on those results, though we would expect additional drilling to be involved.

As of July 31, 2012 and to date, the exploration work undertaken has provided continued positive indications that additional exploration is warranted, but there are as of yet no known or proven reserves, and substantial additional exploration work must be undertaken on the Lida Valley Property in order to determine if a commercially viable reserve does exist.

At present, the Company does not have sufficient funds for the planned drill program, and would need to raise additional capital either through obtaining additional loans, or through the sale of its common stock.  While initial arrangements have been made to accomplish the raising of additional funds, and the Company expects to be able to raise the required funds for the next phases of the exploration program, our success in doing so cannot be assured.

 
10

 

Smokey Valley Claims, Esmeralda County, NV

Location and Access

The Smokey Valley Property is also located in South Western Nevada, approximately 170 miles north of Las Vegas and within 15 miles of the Montezuma peak, positioned North-West as opposed to South, as is the Lida Valley Property. The project area, off highway 265 approximately 5 miles from Silver Creek road, the location of the lithium producing Chemetall Foote project, has excellent infrastructure including a network of paved roads, railroads and cellular telephone coverage.

Regional & Property Geology

The Smokey Valley Property, adjacent to Clayton Valley, is also located in one of a group of inter-mountain basins in west-central Nevada and is surrounded by Cuprite Hills to the Northwest, Stonewall Mountains to the East and Slate Ridge to the Southwest. It has a playa floor of an estimated 15 square miles that receives surface drainage from an area of about 140 square miles. The playa floor contains erosion remnants of Lithium-rich rhyolite tuff and is surrounded by alluvial fan slopes of the mountain ranges.
 
The tertiary volcanic rocks are considered to be involved in the origin of the Lithium deposits in south-central Nevada. The volcanism that created the volcanic rocks also provided the heat energy and hydrothermal activity required to mobilize the Lithium from volcanic glass and other relatively unstable minerals. The Tertiary rhyolites from the Montezuma Range and surrounding mountain ranges are considered to be the most lithium rich rhyolites in the world, (MacDonald et. Al; 1992) Transport of the Lithium would require a hydrothermal fluid, surface water or meteoric groundwater. Evaporation concentrated the Lithium in the brine to economic grades which are considered to be in the 100 to 300 ppm range. The Lithium rich water would also alter the playa sediments to form Lithium-rich clays and Lithium rich inclusions in halite.

Exploration

In the 1970’s USGS conducted a gravity survey covering Clayton Valley and the valley connecting Clayton Valley to Big Smoky where the Smokey Valley Property claims are located. The resulting maps show a relationship between the brine field in Clayton Valley and the deepest parts of the valley. The map also suggests that there is a height of bedrock between the Smoky Valley claims and Clayton Valley which may act as a barrier for water moving from Big Smoky Valley to Clayton Valley.  The USGS performed two exploratory drill holes in Big Smoky Valley, (not on Smoky Valley Property) as part of a program to evaluate the lithium resource potential of the basins adjacent to Clayton Valley. Hole BS13 was terminated to 675 feet, Lithium in sediments ranged from 48-365ppm averaging 160ppm, lithium in water ranged from 100-1,700ppb. Hole BS14 was terminated at 215 feet. Lithium in sediments ranged from 40-287ppm, averaging 150ppm, lithium in water ranged from 820-1300ppb.   These results were of indicative of the validity of additional work being performed on the Smoky Valley Property.

In February 2011, Hasbrouck Geophysics conducted a preliminary controlled source audio magnetotellurics / magnetotellurics (CSMAT/MT), the purpose of the survey was to determine if conductors that might be representative of lithium-bearing brine were present near a previously identified low value gravity anomaly.  This geophysical survey indicated the presence of predominant zones of lower resistivities, which are interpreted as salty, water-saturated sediments or highly fractured bedrock, of sufficient extent and depth to further warrant additional exploration activity.

In May 2012, First Liberty commissioned a Gravity Survey report at a cost of $74,000, which survey was completed by July 2012.

A total of 116 separate gravity stations were acquired along seven profiles, as shown in Figure 1, at nominal line and station spacings of one kilometer. The station locations were first located on a topographic map, uploaded to a hand-held Global Positioning System (GPS), and then staked in the field. Elevations of individual stations were acquired in the field with a Trimble GeoXH GPS unit and confirmed with elevations taken from USGS topographic maps. Because the survey was considered reconnaissance in nature, the generally better than one-half meter elevation accuracies of the stations were considered adequate.

 
11

 

From results of previous modeling conducted in the general area by the report author and other investigators, a density contrast between valley fill sediments and Paleozoic bedrock of 0.5 g/cm3 was chosen to best represent a two-layer case. All lines, except number 1, extended to outcrop at the beginning and/or ending stations and thus the depth to bedrock at those stations was considered as zero for modeling purposes. The middle of survey line number 1 was located near the base of the prominent cinder cone in the area with the idea that bedrock might be near the surface. The most accurate depth modeling results would require bedrock depths from drilling along the line(s) as constraints in the modeling. Since the survey was considered essentially reconnaissance, lines with identified bedrock outcrop at either or both ends were considered sufficiently accurate for the purposes of the survey.

There are two main factors that must be considered regarding target areas for lithium mineralization and concentration: 1) where is the source of the lithium, and 2) does a basin environment exist for the concentration of the lithium transported by meteoric water from the source In the Clayton Valley region it is thought that the source of the lithium is the dark gray lithium enriched rhyolite tuffs that outcrop near Montezuma Peak. Once lithium has been liberated into the water system it remains highly mobile and movement of the lithium with surface water and groundwater will follow basic hydrological principles. Hydrologic basins in Nevada consist of basin fill underlain by either low-permeability or permeable rock with water movement through the basin fill, permeable rock and along faults. Nothing more complex than a topographic low or closed basin is required to concentrate lithium-bearing water. For topographic lows with larger catchment areas there is a greater opportunity to accumulate lithium from wider sources. The water trapped in these lows may move through dipping aquifers until it reaches an impermeable barrier such as a fault scarp.

The complete Bouguer gravity map shown in Figure 2 is contoured from the total 116 stations, using Golden Software’s Surfer computer program (version 10.7.972), with a Bouguer slab density of 2.67 g/cm3. The bedrock depth map can be thought of as a thickness of sediments map, but because the surface elevation within the gravity survey area varies then the bedrock elevation map can often be more useful for identification of low bedrock areas.

If one reasonably assumes that lithium source material and transport mechanisms for this gravity survey area are present and similar to those that have supplied Clayton Valley lithium-bearing brines then areas with lower bedrock elevations (i.e., bedrock topographic lows) may be conducive to increased lithium-bearing brines concentration. Increased bedrock depth, or increased sedimentary thickness, and lower bedrock elevations that form a basin are present in the approximate middle of the survey area. This bedrock topographic low appears to be closed off to the south, but remains open to the north. The deepest portion of the bedrock low is modeled as about 1,850 meters below ground surface (bgs), or approximately -300 meters elevation, along line 7. Because no drilling results are available to those depths, the gravity modeling depths should be considered approximate. However, it is important that the gravity modeling results indicate the presence of a deep basin that

 
12

 


extends over a large area particularly if an arbitrary depth of 600 meters is chosen to represent the boundaries of the basin. With such a large catchment area there is a greater opportunity to accumulate lithium from wider sources. On both the bedrock depth and elevation maps it appears that an additional small, closed basin at a depth of about 900 meters is present near the eastern one-third of line 3 (essentially centered between stations 313 and 314). Somewhat similarly, an anomalous area is present at about the western one-third of line 4 (near station 405) and also approximately three to four kilometers from the western beginning of line 7 (between about stations 705 and 706). These additional anomalous areas may or may not be related to the main bedrock topographic low. From these profiles (either A-A’ or BA’) it is apparent that significantly shallower bedrock is located at the southern end of the geophysically surveyed area, while the bedrock continues to deepen to the northern extent of the survey area.

Based on the interpretation of the modeled gravity data indicates a large topographic low, or basin, that appears to be closed off to the south but remains open to the north. This extensive basin area may be favorable for the accumulation of lithium-bearing brines, but additional investigations need to be conducted. Additional geophysical surveys will further determine the structure of the basin identified in this survey, and map the presence, dip and continuity of conductive zones within the basin.

Recommended additional geophysical surveys prior to drilling are: 1) extend the gravity survey along line 1 to the west and east and add one additional line one kilometer south of line 1 to better define the indicated southern basin closure, 2) acquire additional gravity data along at least two lines to the north, separated by one kilometer each, to determine if the basin closes in that direction, and 3) conduct controlled-source audio-magnetotellurics / magnetotellurics (CSAMT / MT) surveys in selected areas from the gravity survey(s) to determine if conductive zones, possibly indicative of lithium-bearing brines, are present and if so then to map the dip and continuity of those aquifer beds. It is estimated that to satisfy items number 1 and 2 above that approximately 60 additional gravity stations will be required. It is anticipated that nominally 100 CSAMT / MT stations will be sufficient to satisfy item number 3 above. After additional gravity data and new CSAMT / MT data are acquired, processed and interpreted then either reflection seismic surveys or drilling can be conducted. The reflection seismic surveys will detail any possible lithium-bearing brines beds (e.g., similar to the Main Ash and Lower Gravel Aquifers, amongst others, in Clayton Valley) and will map structure in greater detail than the other geophysical techniques.

At present, the Company does not have sufficient funds for the planned additional exploration program, and would need to raise additional capital either through obtaining additional loans, or through the sale of its common stock.  While initial arrangements have been made to accomplish the raising of additional funds, and the Company expects to be able to raise the required funds for the next phases of the exploration program, our success in doing so cannot be assured.

B) Uravan Claims, San Juan Country, Utah (“Van-Ur Property”)

A property purchase agreement for claims located in San Juan County, Utah, for Vanadium and Uranium exploration (the “Van-Ur Agreement”). In regards to the Van-Ur Agreement, the Company was required to:

1.
Make cash payments of $480,000 over a four-year period

  a.
Initial cash payments of $80,000 were made in November and December of 2010; and

  b.
A cash payment of $100,000 was required on December 24, 2010. On December 14, 2010, the parties agreed to defer this payment until up to February 7, 2011 (see below in regard to this payment required).

2.
Issue a total of 1,000,000 restricted shares of common stock over a three-year period

  a.
250,000 shares of common stock were issuable upon execution of the agreement

  b.
250,000 shares were issuable on the first anniversary, December 24 2010, of the Van-Ur Agreement
 
The initial 250,000 shares due and payable under the Van-Ur Agreement were issued in in June 2011. The remaining 250,000 shares were not issued, as a result of the assignment of the Van-Ur Agreement to New America Energy Corp. as described below, and no further share issuances are required.

3.
Comply with a work commitment of $1,000,000 within four years of the date of the Van-Ur Agreement.

  a.
A total of $20,974 was expended on exploration and claim maintenance activities prior to the assignment of the Van-Ur Agreement to New America Energy Corp. as described below.  No further payments are required.

 
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On February 3, 2011, we entered into and closed agreements with New America Energy Corp. (“New America”) and GeoXplor Inc. (“NECA Agreement”), whereby the Company optioned its interest in the mining claims associated with the Van-Ur Agreement, granting an option, as well as exploration rights, in these claims to New America. Pursuant to the terms of the NECA Agreement, the consideration to the Company for entering into this agreement with New America was as follows:

1.
$10,000 on the execution of the NECA Agreement; $33,333 within 120 days of the execution of the NECA Agreement; $33,333 within 240 days of the execution of the NECA Agreement; and $33,334 within 360 days of the execution of the NECA Agreement;

  a.
The amount of $10,000 was received by the Company on February 8, 2011

2.
500,000 shares of New America common stock

  a.
These shares were issued to the Company on February 11, 2011. The fair value of the shares was recorded as an investment in the amount of $250,000 based on the trading price of the shares at the time of issuance, which was $0.50 per share. The value of these shares is to be periodically reviewed and adjusted as required.

3.
A 0.5% net smelter royalty on all net revenue derived from production.

Subject to New America fulfilling the terms of the NECA Agreement, the Company was not required to meet its obligations under the Van-Ur Agreement, including the December 24, 2010 payment of $100,000 (deferred until February 7, 2011) and all future payments, work program commitments, and stock issuances including the December 24, 2010 issuance for 250,000 shares.

Pursuant to the terms of the Van-Ur Agreement, New America made cash payments in the amount of $10,000, and issued 500,000 shares of common stock to the Company and made cash payments in the amount of $50,000 and issued 500,000 shares of common stock to GeoXplor.

The value of the mining property asset associated with this agreement has been divested from the Company’s financial statements, and as of July 31, 2012, the Company has recorded the gain on the transfer of the mineral property option in the amount of $75,000.
 
The payment of $33,333 due to the Company on June 3, 2011 and the payment of $50,000 due to GeoXplor on May 31, 2011 pursuant to the Van-Ur Agreement were not paid as due. The parties to the agreement verbally agreed to extend the payment due dates by 120 days and on August 1, 2011, with an effective date of May 31, 2011, the parties executed an extension agreement.  Under the terms of the extension agreement, during the 120 day extension period commencing from May 31, 2011, GeoXplor had the right to solicit and accept offers by other parties on the property, in which case the Van-Ur Agreement would be terminated and neither New America nor the Company would have any further rights or interest in the Uravan property.  At any time prior to the expiration of the 120 day term either NECA or the Company could pay the required payments to GeoXplor.   If neither NECA nor the Company paid the required payments under the agreement then the property would revert to GeoXplor unless further extended.
 
The extension agreement lapsed on September 30, 2011, with neither New America nor the Company making any additional payments; therefore the claims fully reverted back to GeoXplor Corp.   The Company has no further obligations in respect of the original Van-Ur Agreement or the assignment thereof.

Location and Access

The Uravan Property is located in the northeast corner of San Juan County approximately 40 miles southeast of Moab, Utah. The area is sparsely populated with a small village of La Sal, Utah, about 10 miles west of the claim block. Utah Highway 46, an all-weather paved road provides access to the southern region of the mineral claims. A network of forests roads, drill access roads and jeep trails make most of the claim block accessible year round.

The climate of San Juan County is semi-arid with minor precipitation. The average annual precipitation is 12.83 inches with an average snowfall of 44.5 inches. The snowfalls during November to May occasionally reach 15 inches or more. The Uravan Property is located in the high desert ecosystem with erosional landscape exposing the sandstone formations. Deep canyons with canyon walls composed of alternating erosion-resistant benches and highly erodible slopes, and broad flat benches are the predominant landscape features. Vegetation consists of greasewood, salt bush, rabbit bush with willows and cottonwood in the drainage area.

 
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Regional & Property Geology

The Uravan Mineral claims are located within the Colorado Plateau near the Utah-Colorado border. The Colorado Plateau is a broad area of regional uplift consisting mainly of flat-lying Paleozoic, Mesozoic and Cenozoic sedimentary rocks. The strata is gently folded and faulted by uplift, intrusion and collapse of plastic evaporite formations on the east and by intrusion of laccolithic complexes now composing the La Sal Mountains on the west.

The uranium-vanadium deposits in the La Sal quadrangle occur in the uppermost sandstone of the Salt Wash Member of the Morrison Formation. The ore bearing sandstone range in thickness from a few feet to 100 feet. The sandstone is a medium to fine grained quartzose interbedded with siltstone and mudstone. Near the uranium-vanadium mineralization, the sandstone is white, light gray or light brown, and the siltstone and mudstone are usually light green or gray green.

The uranium-vanadium deposits mined in the nearby producing mines occur in the uppermost sandstone beds within the Salt Wash member of the Morrison Formation. This unit is commonly called the ore-bearing sandstone or third rim in reference to its position above the Entrada Sandstone.

The ore-bearing sandstone is composed of a single broad lens of cross-laminated sandstone ranging from 0 to 30 feet in thickness. In other areas it is composed of overlapping sandstone lenses which have a combined thickness of 30 to 100 feet. The cross-laminated sandstone appears to have been deposited in a flood-plain environment. Scour and fill bedding consisting of cross-bedded sandstone lenses truncated by and direct contact with other truncated lenses separated by thin discontinuous mudstone lenses or mudstone conglomerate. Fragments of fossil wood are abundant in the scour and fill beds and occur either along the bedding planes or in pot like masses called “trash pockets”.

Exploration

A radon survey was completed on the Uravan Mineral Claims during September, 2009. The theory of radon soil surveys is based on the element radon which is a radioactive daughter product of uranium decay. Radon is produced by the radioactive decay of radium, a product of uranium and thorium decay in rocks and soils. Theoretically, radon-222 concentrations in soil should be directly related to the uranium content of the minerals in the soil and rocks. Radon is a daughter product of uranium-238 and a non-reactive, highly mobile gas that migrates away from the site of its uranium parent by diffusion and advection along joints, faults, and intergranular permeable pathways.

The magnitude of a radon anomaly associated with a parent concentration of uranium will be due to the size and grade of the parent body. Dispersion and dilution along the pathways to the surface increase the size of the radon footprint but also reduce the magnitude. The location of the anomaly relative to the uranium body will be strongly influenced by the orientation of the pathways to the surface.

The radon survey uses a system that measures the radon by utilizing an ion chamber with a electrically charged Teflon, called an electret, located inside an electrically conducting plastic chamber of known air volume. The electrets serve as a source of high voltage needed for the chamber to operate as an ion chamber. It also serves as a sensor for the measurement of ionization in air. The ions produced inside the sensitive volume of the chamber are collected by the electrets causing a depletion of charge. The measurement of the depleted charge during the exposure period is a measure of integrated ionization during the measurement period. The electrets charge is read before and after the exposure using a specially built non-contact electret voltage reader.

The Uravan mineral claims radon survey consisted of 101 readings with a minimum reading of 0.35 and a maximum reading of 27.75. The median reading was 6.75 with a midrange of 14.05. The grid results were then contoured and presented in the attached report. Proposed drill locations have also been located and presented on the following map.

The preliminary radon survey data indicates an anomalous east-west radiometric trend. The size of the anomalies appears to be similar to the size of the high grade vanadium-uranium beds mined from the Firefly, Gray Daun and Vanadium Queen Mine. A detailed radon survey would define drill targets and thereby, delineate tonnage and grade within the Uravan Claim Block.

 
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Data compiled from mining activity and regional studies indicates ground considered favorable for Vanadium-Uranium mineralization has the following features:
 
 
Sandstone beds over 30 feet in thickness with a light brown to light gray color with a medium to fine grain size.
 
 
The sandstone contains carbonaceous material and a gray or grayish-green mudstone.
 
 
The beds contain mudstone as a film, pebbles or seams.
 
 
The sandstone is overlain by gray, greenish-gray or green mudstone

As of July 31, 2011, the exploration conducted to date has provided positive indications that additional exploration is warranted, but there are no known or proven reserves, and substantial additional exploration work must be undertaken on the Van-Ur Property.

As the Company is no longer in possession of this property as at July 31, 2012, the provided data is for historical reference only.

ITEM 3.  LEGAL PROCEEDINGS

We know of no material, active or pending legal proceedings against our Company, nor of any proceedings that a governmental authority is contemplating against us.

ITEM 4.  MINE SAFETY DISCLOSURES

None.

 
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PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

Market Information

Our Common Stock is traded on the over-the-counter market and quoted on the OTCBB under the symbol “FLPC”

The table below sets forth the range of high and low bid information for our Common Shares as quoted on the OTCBB for each of the quarters during the two fiscal years ended July 31, 2012:

For the Quarter ended
High
Low
October 31, 2010
$0.65
$0.30
January 31, 2011
$0.49
$0.18
April 30, 2011
$0.44
$0.165
July 31, 2011
$0.33
$0.11
October 31, 2011
$0.10
$0.04
January 21, 2012
$0.08
$0.07
April 30, 2012
$0.05
$0.04
July 31, 2012
$0.05
$0.03

The quotations provided may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Holders of our Common Stock

On July 31, 2012 the shareholders’ list of our common stock showed 15 registered shareholders and 82,001,834 shares outstanding.

Dividend Policy

We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock.  Our future dividend policy will be determined from time to time by our Board of Directors.

Securities Authorized for Issuance under Equity Compensation Plans

As of July 31, 2012, we had not adopted an equity compensation plan and had not granted any stock options.

Recent Sales of Unregistered Securities

On August 9, 2011, the Company signed a confidential term sheet in respect to the creation of a $3,000,000 Equity Line financing structure.  Pursuant to the term sheet, the Company paid a document preparation fee of $7,500, and issued a total of 136,364 shares valued at $15,000.  As of April 30, 2012, the Company has determined that it will not be proceeding with this transaction, and has expensed all costs accordingly.

On January 11, 2012, the Company entered into a 13 month agreement with an unrelated third party for the provision of non-exclusive financial advisor, investment bank and placement agent services to the Company.  Pursuant to this agreement, the Company was required to issue 350,000 shares, which were issued in January 2012, and valued at $24,675 of which $12,390 has been expensed during the fiscal year ended July 31, 2012, and leaving a prepaid expense balance of $12,285.
 
 
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The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended, for the issuance of these 136,364 and 350,000 shares, pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.

According to the Company’s Lithium Agreement with GeoXplor, detailed in Note 3 – Mineral Properties above, 250,000 shares valued at $16,250, were issuable on the second anniversary of the Agreement, December 24 2011, which shares were issued in January 2012.

Further to the Company’s Lithium Agreement with GeoXplor, detailed in Note 3 – Mineral Properties above, a cash payment of $100,000 was required on December 15, 2011. On January 6, 2012, effective December 15, 2011, GeoXplor agreed to defer the payment until March 15, 2012, in exchange for the issuance of 500,000 compensation shares (issued January 2012 valued at $37,450), and the further issuance of 500,000 shares (issued in January 2012 valued at $28,500) to be held by GeoXplor as security against the Payment. Upon fulfilling the Payment obligations within the extension, these security shares are to be returned to the Company for cancellation.  If the Company does not complete in full the Payment obligation before March 15, 2012, such shares may be sold by GeoXplor with the proceeds applied towards any remaining amounts owing.   If there are proceeds in excess of the amounts owing, the excess shall be applied as a pre-payment towards exploration work obligations under the Lithium Agreement. According to an agreement between GeoXplor and the Company signed subsequent to the end of the period (May 31, 2012), effective as of March 15, 2012, all rights and obligations under the original agreement were replaced by those in the new agreement. The additional 500,000 shares, issued in January 2012 valued at $28,500, were agreed to be retained by GeoXplor as compensation and revalued at the effective date of the new agreement, March 15, 2012, for a value of $26,250.

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of these 1,250,000 shares to GeoXplor, pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.

On December 24, 2009, the Company borrowed $200,000 from an unrelated third party under a promissory note. The loan was unsecured, bore interest at 10 percent per annum, and was due and payable on or before December 23, 2010. On February 1, 2010, the Company borrowed an additional $50,000 from the same third party lender, which amount was also unsecured, bore interest at 10 percent per annum, and was due on or before February 1, 2011. On December 23, 2010, the Company and the lender agreed to consolidate the principal amounts, as of December 24, 2010, into a single consolidated loan. The new consolidated loan is in the amount of $250,000 and is unsecured, bears interest at 10 percent per annum, and is due on or before December 23, 2011. On December 23, 2011, the combined principal and interest of the note amounted to $301,973. On January 9, 2012, effective December 23, 2011, the Company and the Lender agreed to convert the entire $301,973 principal and interest, based on the average closing price of the Borrower’s shares for the 10 trading days prior and up to the effective date of the conversion agreement, into restricted common stock of the Company.  The resultant quantity of shares amounted to 3,753,544 shares, which were issued in January 2012.

The 3,753,544 shares issued were in compliance with the exemption from the registration requirements found in Regulation S promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933.  The offer and sale to the purchaser was made in an offshore transaction as defined by Rule 902(h).  No directed selling efforts were made in the U.S. as defined in Rule 902(c).  The offer and sale to the purchaser was not made to a U.S. person or for the account or benefit of a U.S. person.  The following conditions were present in the offer and sale:  a) The purchaser of the securities certified that it is not a U.S. person and did not acquire the shares for the account or benefit of any U.S. person; b) The purchaser has agreed to resell the securities only in compliance with Regulation S pursuant to a registration under the Securities Act, or pursuant to an applicable exemption from registration; and has agreed not to engage in hedging transactions with regard to the securities unless in compliance with the Securities Act; c) The purchaser has acknowledged and agreed with the Company that the Company shall refuse registration of any transfer of the securities unless made in accordance with Regulation S, pursuant to a registration statement under the Securities Act, or pursuant to an applicable exemption from registration and; d) The purchaser has represented that it is acquiring the shares for its own account, for investment

 
18

 

purposes only and not with a view to any resale, distribution or other disposition of the shares in violation of the United States federal securities laws. Neither the Company nor any person acting on its behalf offered or sold these securities by any form of general solicitation or general advertising. The shares sold are restricted securities and the certificates representing these shares have been affixed with a standard restrictive legend, which states that the securities cannot be sold without registration under the Securities Act of 1933 or an exemption therefrom.  No commissions or finder’s fees were paid by the Company in connection with the issuance of these shares.

On December 16, 2011, the Company received a total of $15,000 from the proceeds of the sale of 187,500 shares of its common stock under a private placement agreement, priced at $0.08 / share, which shares were issued in January 2012.  The purchaser has received 187,500 warrants, each with the right to purchase a share at the price of $0.08/share, valid through to December 15, 2013.

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of these 187,500 pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.

On April 16, 2012, the Company issued 250,000 shares, according to the terms of a consulting agreement with Mr. Robert B. Reynolds Jr., valued at $0.046/share for a total valuation of $11,500.

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of 250,000 shares to Mr. Reynolds, pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.
 
The Company entered into an agreement on August 22, 2012 with Group8 Minerals, a Nevada Corporation ("Group8”), and Group8 Mining Innovations, a Nevada Corporation (“G8MI” or “Seller”), the sole Shareholder of Group8, whereby G8MI transferred 81% of the total issued and outstanding shares of Group8 in exchange for the issuance of 83,000,000 shares of First Liberty to G8MI. The Company is further obligated to make a cash payment to G8MI in the amount of $100,000 on or before September 30, 2012, which amount has been paid in full, and by the way of loans to Group8 for property payments and exploration costs, i) $500,000 on or before October 30, 2012; ii) $500,000 on or before December 31, 2012; iii) $500,000 on or before February 28, 2013, and; iv) $500,000 on or before April 30, 2013. Group8 holds a fifty percent (50%) interest in and to certain Nevada limited liability companies, which hold interests in certain mining properties and milling operations in Nevada, pertaining to the mineral ore Stibnite (Antimony). Approximately $149,000 has been provided as of the date of this filing towards the development obligations under the Agreement.
 
The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of the 83,000,000 shares to G8MI, pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.

Tangiers Capital has exercised its right to convert portions of its Secured Convertible Promissory Note dated February 23, 2012, as follows;

 
i.
Under the Conversion Notice dated September 6, 2012, Tangiers converted a portion of the debt equal to $5,000 in exchange for shares at a rate of $0.01628 per share, for a total of 307,125 shares.
 
ii.
Under the Conversion Notice dated September 20, 2012, Tangiers converted a portion of the debt equal to $10,000 in exchange for shares at a rate of $0.01658 per share, for a total of 603,318 shares.
 
iii.
Under the Conversion Notice dated October 24, 2012, Tangiers converted a portion of the debt equal to $15,000 in exchange for shares at a rate of $0.01673 per share, for a total of 896,593 shares.

As of the date of this filing, a total of $30,000 has been converted for a total issuance of 1,807,036 shares. 
 
The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of the 1,807,036 shares to Tangiers, pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.

Purchases of Equity Securities by the Issuer and Affiliated Purchases

During each month within the fourth quarter of the fiscal year ended July 31, 2012, neither we nor any “affiliated purchaser,” as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities.

ITEM 6.  SELECTED FINANCIAL DATA.

As a “smaller reporting company”, we are not required to provide the information required by this Item.

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

This Annual Report on Form 10-K contains forward-looking statements relating to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in

 
19

 

forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Given these uncertainties, readers of this Annual Report on Form 10-K and investors are cautioned not to place undue reliance on such forward-looking statements.  The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

All dollar amounts stated herein are in US dollars unless otherwise indicated.

The management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").  The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the year ended July 31, 2011, together with notes thereto.

As used in this quarterly report, the terms "we", "us", "our", and the "Company" mean First Liberty Power Corp.

Our Current Business

We are an exploration stage company engaged in the exploration of mineral properties.

Liquidity & Capital

As of July 31, 2012, our cash balance was $35,948 which is s decrease from our cash balance of $74,576 at July 31, 2011.

As of July 31, 2012, our total current assets are $307,832 ($799,893 - July 31, 2011).  Our current liabilities are $794,097 ($439,009 – July 31, 2011).

At present, the Company’s cash position is insufficient to meet its obligations through to the end of the fiscal year, as we are not currently generating any revenues, and, over the next 12 months, we will require additional funds to meet our operating obligations and property payment / work program obligations, as well as the repayment of the convertible notes should they not be converted to equity prior to the maturity dates in February 22, 2013 and March 6, 2013.  At present, we anticipate our funding requirements to be approximately $925,000.   This estimate is comprised of $325,000 for required and additional exploration and maintenance expenditures on our Lithium properties, a further $600,000 to cover operating, debt and overhead costs.  Additional amounts will be required if we identify additional acquisition targets, or determine that additional exploration on the Lithium properties are required to accelerate their development.

This amount may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. We need to raise additional funds in the near future in order to proceed with our exploration program, as our available cash is insufficient.

The Company intends to pursue all available and reasonable avenues to raise the additional funds required to continue the exploration and development of its properties.

There is no assurance we will be able to identify or acquire these additional funds, or additional funds on a commercially reasonable basis.

In fiscal year 2012/2013 we anticipate that based on meeting our known obligations for general operations and for maintaining our two agreements current, we will be required to expend the following cash amounts:

 
20

 


   
Amount
 
General operating costs
  $ 100,000  
Professional Fees
    75,000  
Consulting Fees
    125,000  
Exploration / Maintenance Costs – Lida Valley (1)
    325,000  
Promissory Note, due December 2011, including estimated interest
    300,000  
Total
  $ 925,000  

 
(1)
The Company is required to expend $325,000 in exploration and other rights on the Property, in accordance with the Purchase Agreement dated May 31, 2012 between GeoExplor Corp. and First Liberty Power Corp.

If we are to acquire additional properties, or undertake additional operational activities, we would be required to raise additional capital.  There can be no assurance that we will be successful in raising the capital required to fund our planned expenditures or other additional activities.

Results of Operations

Our revenues since inception (March 28, 2007) to date have been $nil.   For the fiscal year ended July 31, 2012, our net loss increased to $1,092,712 from $740,098 in the prior year.

This increase was due almost entirely to additional shares and fees related to management consulting services, resulting in management and consulting fees of $429,100 in the current period.   Additional causes were in increase in Professional Fees to $296,521 ($71,300 – 2011) mostly from increased investments in IR activities.
 
We have suffered recurring losses from operations. The continuation of our Company is dependent upon our Company attaining and maintaining profitable operations and raising additional capital as needed. In this regard, we have successfully raised additional capital through equity offerings and loan transactions in the past, and presently believe we will be able to do so in the future, though we can offer no assurance of this outcome as no specific arrangements are in place.
 
Going Concern
 
In their audit report relating to our financial statements for the period ended July 31, 2012, our independent accountants indicated that there are a number of factors that raise substantial doubt about our ability to continue as a going concern. Such factors identified in the report are our lack of revenue resulting in a net loss position and insufficient funds to meet our business objectives. All of these factors continue to exist and raise doubt about our status as a going concern.
 
We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. At this time, we cannot provide investors with any assurance that we will be able to obtain sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months.

Critical Accounting Policies and Estimates

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 
21

 


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


 
22

 

FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXLORATION STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS


 
Page
Index to Financial Statements July 31, 2012 and 2011
F-1
Report of Independent Registered Public Accounting Firm
F-2
Balance Sheets as of July 31, 2012 and 2011
F-3
Statements of Operations for the Years Ended July 31, 2012 and 2011, and Cumulative from Inception (March 28, 2007) through July 31, 2012
F-4
Statement of Stockholders’ Equity (Deficit) for the Period from Inception (March 28, 2007) through July 31, 2012
F-5
Statements of Cash Flows for the Years Ended July 31, 2012 and 2011, and Cumulative from Inception (March 28, 2007)  through July 31, 2012
F-6
Notes to Financial Statements July 31, 2012 and 2011
F-7 to F-20


 
F-1

 

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders
First Liberty Power Corp.

We have audited the accompanying balance sheets of First Liberty Power Corp. (An Exploration Stage Company) (the “Company”) as of July 31, 2012 and 2011 and the related statements of operations, stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended July 31, 2012 and for the period from inception (March 28, 2007) through July 31, 2012. First Liberty Power Corp.’s management is responsible for these financial statements.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of First Liberty Power Corp (An Exploration Stage Company) as of July 31, 2012 and 2011 and the results of its operations and its cash flows for each of the years in the two-year period ended July 31, 2012 and for the period from inception (March 28, 2007) through July 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ De Joya Griffith, LLC
Henderson, Nevada
November 9, 2012


 
 
De Joya Griffith, LLC ● 2580 Anthem Village Dr. ● Henderson, NV ● 89052
Telephone (702) 563-1600 ● Facsimile (702) 920-8049
www.dejoyagriffith.com

 
F-2

 

FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS
(Audited)

   
July 31,
2012
   
July 31,
2011
 
ASSETS
           
CURRENT ASSETS:
           
Cash in bank
  $ 35,984     $ 74,576  
Prepaid expense
    251,848       550,317  
      Available for sale securities
    20,000       175,000  
                      Total current assets
    307,832       799,893  
                 
PROPERTY:
               
Deposit on mineral property
    319,950       240,000  
                 
OTHER ASSETS:
               
      Unamortized financing fees
    54,050       -  
                 
TOTAL ASSETS
  $ 681,832     $ 1,039,893  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
               
                 
 CURRENT LIABILITIES:
               
      Accounts payable
  $ 81,590     $ 61,268  
      Accrued liabilities
    12,730       40,992  
      Due to related parties – current portion
    158,058       86,749  
      Convertible notes payable, net of unamortized discount
    541,719       250,000  
                      Total current liabilities
    794,097       439,009  
                 
LONG TERM LIABILITIES:
               
       Due to related party
    42,866       -  
                 
                      Total liabilities
    836,963       439,009  
                 
Commitments and Contingencies
               
                 
STOCKHOLDERS’ EQUITY (DEFICIT)
               
Common stock, par value $0.001 per share; 540,000,000 shares authorized;  82,001,834  and 76,074,426  shares issued and outstanding in 2012 and 2011, respectively
    82,002       76,074  
Additional paid-in capital
    2,270,872       1,808,603  
Advances to related party
    (206,500 )     -  
Accumulated other comprehensive loss
    -       (75,000 )
Deficit accumulated during the exploration stage
    (2,301,505 )     (1,208,793 )
                     Total stockholders' equity (deficit)
    (155,131 )     600,884  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
  $ 681,832     $ 1,039,893  

The accompanying notes are an integral part of these financial statements.


 
F-3

 

FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Audited)

         
Cumulative
 
           From Inception  
   
July 31,
   
(March 28, 2007)
 
   
2012
   
2011
   
to July 31, 2012
 
                   
REVENUES
  $ -     $ -     $ -  
                         
EXPENSES:
                       
       Exploration costs
    83,725       123,820       314,236  
   General and administrative-
                       
       Management & consulting fees
    429,100       613,274       1,248,432  
       Professional fees
    296,521       71,300       440,901  
       General and administration
    27,911       59,109       132,308  
   Total general and administrative expenses
    753,532       743,683       1,821,641  
                         
LOSS FROM OPERATIONS
    (837,257 )     (867,503 )     (2,135,877 )
                         
OTHER INCOME (EXPENSE):
                       
     Gain on sale of mineral property
    -       155,000       155,000  
     Loss on investment
    (230,000 )     -       (230,000 )
     Interest expense
    (23,711 )     (26,617 )     (64,706 )
     Exchange loss
    (1,744 )     (978 )     (2,722 )
 
                       
TOTAL OTHER INCOME (EXPENSE)
    (255,455 )     127,405       (142,428 )
                         
NET LOSS
  $ (1,092,712 )   $ (740,098 )   $ (2,278,305 )
                         
COMPREHENSIVE LOSS
                       
     Change in market value of securities
    -       (75,000 )     (75,000 )
                         
COMPREHENSIVE LOSS
  $ (1,092,712 )   $ (815,098 )   $ (2,353,305 )
                         
LOSS PER COMMON SHARE:
                       
      Loss per common share – basic
  $ (0.01 )   $ (0.01 )        
      Comprehensive loss per common share-basic
  $ (0.01 )   $ (0.01 )        
                         
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC
    79,652,276       68,926,172          

The accompanying notes are an integral part of these financial statements.



 
F-4

 

FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE PERIOD FROM INCEPTION (MARCH 28, 2007)
THROUGH JULY 31, 2012
(Audited)

                           
Deficit
             
                           
Accumulated
   
Accumulated
       
         
Additional
               
During the
   
Other
       
   
Common Stock
   
Paid-in
   
Stock
   
Advances to
   
Exploration
   
Comprehensive
       
   
Shares
   
Amount
   
Capital
   
Payable
   
Related party
   
Stage
   
loss
   
Totals
 
                                                 
Balance – March 28, 2007
    -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Common stock issued for cash
    43,200,000       43,200       -       -       -       (23,200 )     -       20,000  
Net loss for the period
    -       -       -       -       -       (520 )     -       (520 )
Balance - July 31, 2007
    43,200,000       43,200       -       -       -       (23,720 )     -       19,480  
                                                                 
Common stock issued for cash
    24,975,000       24,975       21,525       -       -       -       -       46,500  
Deferred offering costs
    -       -       (13,750 )     -       -       -       -       (13,750 )
Forgiveness of related party debt
    -       -       475       -       -       -       -       475  
Net loss for the period
    -       -       -       -       -       (41,576 )     -       (41,576 )
Balance July 31, 2008
    68,175,000       68,175       8,250       -       -       (65,296 )     -       11,129  
                                                      -          
Net loss for the period
    -       -       -       -       -       (20,196 )     -       (20,196 )
Balance July 31, 2009
    68,175,000       68,175       8,250       -       -       (85,492 )             (9,067 )
                                                      -          
Common stock subscribed for cash- 720,000 shares
    -       -       -       260,000       -       -       -       260,000  
Common stock to be issued for services
    -       -       -       64,973       -       -       -       64,973  
Common stock issued for services
    250,000       250       187,250       -       -       -       -       187,500  
Net loss for the period
    -       -       -       -       -       (383,203 )     -       (383,203 )
Balance July 31, 2010
    68,425,000       68,425       195,500       324,973       -       (468,695 )             120,203  
                                                                 
Common stock subscribed for cash
    970,000       970       484,030       (260,000 )     -       -       -       225,000  
Common stock to be issued for services
    5,750,000       5,750       980,002       (64,973 )     -       -       -       920,779  
Common stock issued for property acquisitions
    929,426       929       149,071       -       -       -       -       150,000  
Change in market value of securities
    -       -       -       -       -       -       (75,000 )     (75,000 )
Net loss for the period
    -       -       -       -       -       (740,098 )     -       (740,098 )
Balance July 31, 2011 (audited)
    76,074,426     $ 76,074     $ 1,808,603     $ -     $ -     $ (1,208,793 )   $ (75,000 )   $ 600,884  
                                                                 
Common stock subscribed for cash
    187,500       188       14,812       -       -       -               15,000  
Common stock to be issued for services
    736,364       736       50,439       -       -       -       -       51,175  
Common stock issued for conversion of debt
    3,753,544       3,754       298,218       -       -       -       -       301,972  
Common stock issued for property acquisitions
    1,250,000       1,250       78,700       -       -       -       -       79,950  
Warrants granted for commission fees
    -       -       20,100       -       -       -       -       20,100  
Change in market value of securities
    -       -       -       -       -       -       (155,000 )     (155,000 )
Realized loss on securities
    -       -       -       -       -       -       230,000       230,000  
Advances to related party
    -       -       -       -       (206,500 )     -       -       (206,500 )
Net loss for the period
    -       -       -       -       -       (1,092,712 )     -       (1,092,712 )
Balance July 31, 2012 (audited)
    82,001,834     $ 82,002     $ 2,270,872     $ -     $ (206,500 )   $ (2,301,505 )   $ -     $ (155,131 )

The accompanying notes are an integral part of these financial statements.


 
F-5

 

FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Audited)

             
         
Cumulative
 
   
July 31,
   
From Inception
 
               
(March 28, 2007)
 
   
2012
   
2011
   
To July 31, 2012
 
 OPERATING ACTIVITIES:
                 
Net loss
  $ (1,092,712 )   $ (740,098 )   $ (2,278,305 )
  Adjustments to reconcile net loss to net cash (used in) operating activities:
                       
Debt forgiven
    -       -       475  
Gain/Loss on sale of property
    230,000       (155,000 )     75,000  
Stock based compensation, consulting services
    407,745       493,277       1,095,263  
Convertible note issued for service
    22,500       -       22,500  
Financing fees
    71,269       -       71,269  
      Changes in net assets and liabilities -
                       
Accrued interest
    23,711       26,614       64,703  
Prepaid expense
    (8,602 )     (1,400 )     (10,185 )
Change in unamortized fees
    (51,500 )     -       (51,500 )
Accounts payable - trade
    20,322       27,696       81,590  
Accrued liabilities
    -       (11,124 )     -  
Accounts payable – related parties
    15,150       19,820       92,138  
NET CASH USED IN OPERATING ACTIVITIES
    (299,117 )     (340,215 )     (837,052 )
 
                       
INVESTING ACTIVITIES:
                       
    Proceeds on sale of property
    -       10,000       (185,000 )
    Loan to other entity
    (206,500 )     -       (206,500 )
NET CASH USED IN INVESTING ACTIVITIES
    (206,500 )     10,000       (391,500 )
                         
FINANCING ACTIVITIES:
                       
   Proceeds from the issuance of common stock
    15,000       225,000       566,500  
   Proceeds from Notes/Loans Payable
    353,000       -       603,000  
   Proceeds from Related Party Debt
    119,000       -       128,761  
   Payments on Related Party Debt
    (19,975 )     -       (19,975 )
   Deferred offering costs
    -       -       (13,750 )
NET CASH PROVIDED BY FINANCING ACTIVITIES
    467,025       225,000       1,264,536  
                         
NET INCREASE (DECREASE) IN CASH
    (38,592 )     (105,215 )     35,984  
                         
CASH – BEGINNING OF PERIOD
    74,576       179,791       -  
CASH – END OF PERIOD
  $ 35,984     $ 74,576     $ -  
                         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON-CASH ACTIVITIES
                       
   Cash paid during the period for:
                       
      Interest
  $ -     $ -     $ -  
      Income taxes
  $ -     $ -     $ -  
      Change in prepaid, net
  $ 19,972     $ 920,779     $ 73,077  
      Conversion of debt
  $ 301,973     $ -     $ 301,973  
      Convertible note issued for prepaid
  $ 135,000     $ -     $ 135,000  
      Shares issued for deposit on mineral property
  $ 79,950     $ -     $ 79,950  
                         

The accompanying notes are an integral part of these financial statements.


 
F-6

 

FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 1 – Organization and summary of significant accounting policies

Basis of Presentation and Organization

First Liberty Power Corp. (“First Liberty Power” or the “Company” and formerly Quuibus Technology, Inc.) is a Nevada corporation in the exploration stage.  The Company was incorporated under the laws of the State of Nevada on March 28, 2007.  The original business plan of the Company was focused on developing and offering a server-based software product for the creation of wireless communities. The Company commenced a capital formation activity to effect a Registration Statement on Form SB-2 with the Securities and Exchange Commission, and raise capital of up to $60,000 from a self-underwritten offering of 1,200,000 shares of newly issued common stock in the public markets. The Registration Statement on Form SB-2 was filed with the SEC on November 13, 2007, and declared effective on November 21, 2007. On February 18, 2008, the Company completed an offering of its registered common stock.

In December 2009, the Company changed its business direction, and the Company’s primary focus is on exploration of domestic strategic energy and mineral properties to supply the emerging demand for clean energy.  The accompanying financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting.

On December 22, 2009, the Company declared a 27 for 1 forward stock split of its authorized and issued and outstanding common stock. The Company’s authorized common stock increased from 20,000,000 shares of common stock with a par value of $0.001 to 540,000,000 shares of common stock with a par value of $0.001. The effect of the stock split has been recognized retroactively in the stockholders’ equity accounts as of March 28, 2007, the date of our inception, and in all shares and per share data in the financial statements.

Effective December 22, 2009, the Company changed its name from “Quuibus Technology, Inc.” to “First Liberty Power Corp.” by way of a merger with its wholly owned subsidiary First Liberty Power Corp., which was formed solely for the name change.

Cash and Cash Equivalents

For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
 
Mineral Properties

The Company is primarily engaged in the business of the acquisition, exploration, development, mining, and production of domestic strategic energy and mineral properties, with emphasis on lithium carbonate and additional strategic minerals.  Mineral claim and other property acquisition costs are capitalized as incurred.  Such costs are carried as an asset of the Company until it becomes apparent through exploration activities that the cost of such properties will not be realized through mining operations.  Mineral exploration costs are expensed as incurred, and when it becomes apparent that a mineral property can be economically developed as a result of establishing proven or probable reserve, the exploration costs, along with mine development cost, are capitalized.  The costs of acquiring mineral claims, capitalized exploration costs, and mine development costs are recognized for depletion and amortization purposes under the units-of-production method over the estimated life of the probable and proven reserves.  If mineral properties, exploration, or mine development activities are subsequently abandoned or impaired, any capitalized costs are charged to operations in the current period.

 
F-7

 

FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 1 – Organization and summary of significant accounting policies (continued)

Revenue Recognition

The Company is in the exploration stage and has yet to realize revenues from operations.  Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

Long-lived assets

The Company accounts for its long-lived assets in accordance with FASB ASC 360-10, “Property, Plant and Equipment” which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposal value.
 
Investments

The Company holdings in marketable securities classified as available-for-sale are carried at fair value. The carrying value of marketable securities is reviewed each reporting period for declines in value that are considered to be other-than temporary and, if appropriate, the investments are written down to their estimated fair value. Realized gains and losses and declines in value judged to be other-than-temporary on available for sale securities are included in the Company’s statements of operations. Unrealized gains and unrealized losses deemed temporary are included in accumulated other comprehensive income (loss).

Effective February 8, 2011, the Company acquired 500,000 shares of New America Energy common stock pursuant to an Agreement between the Company, New America Energy and GeoXplor (refer to Note 3) for the deemed value of $250,000. The equity investment will be periodically reviewed to determine if impairment is required. As of July 31, 2012, the Company realized $230,000 in loss on investment, and reduced the value of the 500,000 shares of New American Energy common stock to $20,000.

Loss per Common Share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period.  Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  There were no dilutive financial instruments issued or outstanding during the years ended July 31, 2012, and 2011.
 
 
F-8

 


FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 1 – Organization and summary of significant accounting policies (continued)

Income Taxes

The Company accounts for income taxes pursuant to FASB ASC Topic 740, Income Taxes.  Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.  The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

The Company maintains a valuation allowance with respect to deferred tax assets.  The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period.  Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset.  Any change in the valuation allowance will be included in income in the year of the change in estimate.

Fair Value of Financial Instruments

The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of July 31, 2012 and 2011, the carrying value of the Company’s financial instruments approximated fair value due to the short-term nature and maturity of these instruments.

Common Stock Registration Expenses

The Company considers incremental costs and expenses related to the registration of equity securities with the SEC, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions.  As such, subsequent registration costs and expenses are reflected in the accompanying financial statements as general and administrative expenses, and are expensed as incurred.

Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America.  The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of July 31, 2012 and 2011, and expenses for the years ended July 31, 2012 and 2011, and cumulative from inception.  Actual results could differ from those estimates made by management.

Asset retirement obligations

The Company has adopted the provisions of FASB ASC 410-20 “Asset Retirement and Environmental Obligations,” which requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the related oil and gas properties. As of July 31, 2012, there has been no asset retirement obligations recorded.


 
F-9

 

FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 2 – Going concern

The Company is currently in the exploration stage and has engaged in limited operations. While management of the Company believes that the Company will be successful in its planned operating activities, there can be no assurance that it will be able to be successful in the development of its product, sale of its planned product, and services that will generate sufficient revenues to sustain its operations.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has incurred an operating loss since inception and has no revenues to offset its operating costs. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
 
Note 3 – Mineral properties

A) Lithium Agreement:

On December 24, 2009, the Company entered into two property purchase agreements with GeoXplor Corp. (“GeoXplor”), which granted exclusive exploration licenses to the mineral properties described in the agreements for claims located in Esmeralda County, Nevada, for Lithium and Lithium Carbonate exploration.

Under these Lithium Agreements, the Company is required to:

1.
Make cash payments of $490,000 over a four-year period
 
 
 
a.
Initial cash payments of $115,000 were made in November and December of 2010; and,
 
b.
 
 
c.
 
A cash payment of $75,000 was required on December 24, 2010. On December 14, 2010, the parties agreed to defer this payment to February 7, 2011. On January 10, 2011, GeoXplor agreed to accept payment in the form of restricted common shares of the Company, in the amount of 179,426 shares, which shares were issued in June 2011; and,
Further to the Company’s Lithium Agreement with GeoXplor, detailed in Note 3 – Mineral Properties above, a cash payment of $100,000 was required on December 15, 2011. On January 6, 2012, effective December 15, 2011, GeoXplor agreed to defer the payment until March 15, 2012, in exchange for the issuance of 500,000 compensation shares (issued January 2012 valued at $37,450), and the further issuance of 500,000 shares (issued in January 2012 valued at $28,500) to be held by GeoXplor as security against the Payment. Upon fulfilling the Payment obligations within the extension, these security shares are to be returned to the Company for cancellation. If the Company does not complete in full the Payment obligation before March 15, 2012, such shares may be sold by GeoXplor with the proceeds applied towards any remaining amounts owing. If there are proceeds in excess of the amounts owing, the excess shall be applied as a pre-payment towards exploration work obligations under the Lithium Agreement. The additional 500,000 shares valued at $28,500 were later agreed to be retained by GeoXplor as compensation and revalued at the effective date of the new agreement, March 15, 2012, for a value of $26,250.

2.
Issue a total of 1,000,000 restricted shares of common stock over a three-year period
 
 
 
a.
250,000 shares of common stock were issuable upon execution of the Lithium Agreement; and
 
b.
250,000 shares were issuable on the first anniversary, December 24 2010, of the Lithium Agreement. In June 2011, the combined 500,000 shares were issued and valued at $50,000
 
c.
    d.
250,000 shares were issuable on the second anniversary, December 24 2011, of the Lithium Agreement, which shares were issued in January 2012 valued at $37,450.
There remains a further 250,000 shares to be issued on December 24, 2012.
 
 
F-10

 
FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 3 – Mineral properties (continued)

On May 31, 2012, the Company entered into a new purchase agreement with GeoXplor Corp. (the “Lithium Agreement”), which is effective as of March 15, 2012. Under this Agreement, the Company has been granted an exclusive four year exploration license in regards to the two mineral properties described in the Agreement. One property encompasses 58 placer claims (9280 acres) located in Lida Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Lida Valley Property"), and the other encompasses 70 placer claims (11,200 acres) located in Smokey Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Smokey Valley Property"). Pursuant to the Agreement, upon the completion of the required payments and work commitments, GeoXplor shall transfer title to the properties to the Company and shall retain a 5% royalty, on which we shall have the option to purchase up to 4%, for $1,000,000 per 1%.

The Lithium Agreement is a replacement of all prior agreements pertaining to the Lida Valley claims contained within the Purchase Agreement dated December 24, 2009 between GeoXplor and the Company. This Agreement supersedes and replaces all prior agreements in respect to those claims.

Under the new Lithium Agreement, the Company is required to:

Make Cash Payments - First Liberty shall pay GeoXplor in consideration of the grant of the exploration license and other rights granted under this Agreement a total of $725,000, according to the following schedule:

 
(1)
Twenty-Five Thousand Dollars ($25,000.00) within 5 days of the execution of this agreement, which were paid during the year ended July 31, 2012;
 
(2)
One-hundred Thousand Dollars ($100,000.00) to GeoXplor on or before December 31, 2012;
 
(3)
Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2013;
 
(4)
Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2014;
 
(5)
Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2015;

Stock Issuance – As additional consideration, the Purchase Price shall include the issuance of 2,000,000 Shares, subject to such conditions as may be imposed by the rules and regulations of the United States Securities and Exchange Commission, as follows:

 
(1)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2012;
 
(2)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2013;
 
(3)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2014;
 
(4)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2015;

Work Commitment – First Liberty shall expend not less than One Million Five-Hundred Thousand Dollars ($1,500,000) in Mineral Exploration and Development Testing ("Work"). The Work shall be scheduled according to the following schedule:

 
(1)
One Hundred Thousand Dollars ($100,000.00) on or before November 15, 2012;
 
(2)
Four-hundred Thousand Dollars ($400,000.00) on or before December 31, 2012;
 
(3)
Five-hundred Thousand Dollars ($500,000.00) on or before December 31, 2013;
 
(4)
Five-hundred Thousand Dollars ($500,000.00) on or before December 31, 2014;

As of date of this report, the Company has expended approximately $80,000 towards the required Word program.

 
F-11

 


FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 3 – Mineral properties (continued)

Conditions for Transfer of Title and Subsequent Limitations

 
 (1)
At such time as the Company has completed the required payments, work program and stock transfers, the Properties shall be transferred to the Company by Quitclaim Deed.

 
 (2)
Concurrently with the transfer of title to First Liberty, First Liberty shall convey to GeoXplor a “Net Value Royalty” on production of lithium carbonate and other lithium minerals from the Properties measured by five percent (5%) of the gross proceeds received by the First Liberty from the sale or other disposition of lithium carbonate or other lithium compounds less (i) transportation of the product from the place of treatment to the purchaser, (ii) all handling and insurance charges associated with the transportation, and (iii) any taxes associated with the sale or disposition of the product (excluding any income taxes of First Liberty). First Liberty shall have the further right to purchase up to four percent (4%) of the Net Value Royalty, in whole percentage points, for One Million Dollars ($1,000,000) for each one percent (1%).
 
 
(3)
If First Liberty, its assignee or a joint venture including First Liberty, (i) delivers to its Board of Directors or applicable other management a feasibility study recommending mining of lithium carbonate or other lithium compound from the Properties and such Board of management authorizes implementation of a mining plan, or (ii) sells, options, assigns, disposes or otherwise alienates all or a portion of its interest in the Properties, First Liberty shall pay GeoXplor an additional bonus of Five Hundred Thousand Dollars ($500,000) in cash or Shares of First Liberty.  The election to obtain cash or shares of First Liberty shall be at the sole election of GeoXplor.

As of July 31, 2012, a total of $326,448 has been expended on exploration and claim maintenance activities.

B) Van-Ur Agreement:

A property purchase agreement for claims located in San Juan County, Utah, for Vanadium and Uranium exploration (the “Van-Ur Agreement”). In regards to the Van-Ur Agreement, the Company was required to:

1.
Make cash payments of $480,000 over a four-year period

a.
Initial cash payments of $80,000 were made in November and December of 2010; and

b.
A further cash payment of $100,000 was required on December 24, 2010. On December 14, 2010, the parties agreed to defer this payment until up to February 7, 2011 (see below in regard to this payment required).

2.
Issue a total of 1,000,000 restricted shares of common stock over a three-year period

a.
250,000 shares of common stock were issuable upon execution of the agreement

b.
A further 250,000 shares were issuable on the first anniversary, December 24 2010, of the Van-Ur Agreement
 
The first share issuances due and payable under the Van-Ur Agreement, totaling 500,000 shares, were issued in part (250,000) subsequent to the current period. The remaining 250,000 shares are not to be issued, as a result of the assignment of this agreement to New America Energy Corp. described below.

3.
Comply with a work commitment of $1,000,000 within four years of the date of the Van-Ur Agreement.

a.
As of July 31, 2011, a total of $20,974 has been expended on exploration and claim maintenance activities.


 
F-12

 

FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 3 – Mineral properties (continued)

On February 3, 2011, we entered into and closed agreements with New America Energy Corp. (“New America”) and GeoXplor Inc. (“NECA Agreement”), whereby the Company optioned its interest in the mining claims associated with the Van-Ur Agreement, granting an option, as well as exploration rights, in these claims to New America. Pursuant to the terms of the NECA Agreement, the consideration to the Company for entering into this agreement with New America was as follows:

1.
$10,000 on the execution of the NECA Agreement; $33,333 within 120 days of the execution of the NECA Agreement; $33,333 within 240 days of the execution of the NECA Agreement; and $33,334 within 360 days of the execution of the NECA Agreement;

a.
The amount of $10,000 was received by the Company on February 8, 2011


2.
500,000 shares of New America common stock

a.
These shares were issued to the Company on February 11, 2011. The fair value of the shares was recorded as an investment in the amount of $250,000 based on the trading price of the shares at the time of issuance, which was $0.50 per share. The value of these shares is to be periodically reviewed and adjusted as required.

3.
A 0.5% net smelter royalty on all net revenue derived from production.

Subject to New America fulfilling the terms of the NECA Agreement, the Company will not be required to meet its obligations under the UraVan Agreement, including the December 24, 2010 payment of $100,000 (deferred until February 7, 2011) and all future payments, work program commitments, and stock issuances including the December 24, 2010 issuance for 250,000 shares.

Pursuant to the terms of the Van-Ur Agreement, New America made cash payments in the amount of $10,000, and issued 500,000 shares of common stock to the Company and made cash payments in the amount of $50,000 and issued 500,000 shares of common stock to GeoXplor.

The value of the mining property asset associated with this agreement has been divested from the Company’s financial statements, and as of July 31, 2011, the Company recorded the gain on the transfer of the mineral property option in the amount of $80,000.

The payment of $33,333 due to the Company on June 3, 2011 and the payment of $50,000 due to GeoXplor on May 31, 2011 pursuant to the Van-Ur Agreement were not paid as due. The parties to the agreement verbally agreed to extend the payment due dates by 120 days and on August 1, 2011, with an effective date of May 31, 2011, the parties executed an extension agreement.  Under the terms of the extension agreement, during the 120 extension period commencing from May 31, 2011, GeoXplor has the right to solicit and accept offers by other parties on the property, in which case the Van-Ur Agreement will be terminated and neither New America or the Company will have any further rights or interest in the Uravan property.  At any time prior to the expiration of the 120 day term either NECA or the Company could pay the required payments to GeoXplor.   Should neither NECA nor the Company pay the required payments under the agreement then the property will revert to GeoXplor unless further extended.

The extension agreement was lapsed on September 30, 2011, with neither New America nor the Company making additional payments; therefore the claims have fully reverted back to GeoXplor Corp.

 
F-13

 
 
FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 4 – Convertible notes payable

Tangiers Investors, LLC (“Tangiers”)

On February 23, 2012, the Company entered into an agreement with Tangiers Investors, LP, a Delaware limited partnership, an accredited investor, whereby Tangiers Investors loaned the Company the aggregate principal amount of $102,500, less $2,500 for legal related costs and $10,000 fee to be paid to a third party, together with interest at the rate of eight percent (8%) per annum, until the maturity date of February 22, 2013. On March 7, 2012, the Company entered into another agreement with Tangiers for the same amount and terms with the maturity of March 6, 2013. The original issue discount note, as described in ASC 480-55, may not be prepaid in whole or in part.

If the Note is not paid in full with interest on the maturity date, Tangiers has the right to convert this Note into restricted common shares of the Company. The Company at its option may elect to convert all or part of the principal and any accrued unpaid interest on these notes at any time or times on or before the maturity based on a conversion price. The conversion price (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower) shall equal to 65% multiplied by  the average of the two lowest closing prices during the ten (10) trading days prior to conversion notice.

The two (2) original issue discount notes were valued for $315,385, consists the principal amount of $205,000 and a discount of $110,385 which valued based on the 65% conversion rate. For the fiscal year ended July 31, 2012, $45,994 discount and $15,417 financing fee had been amortized and expensed.

The Company may prepay all or any portion of the aggregate principal amount and accrued interest within ninety (90) days of the date of issuance in an amount equal to one hundred twenty percent (120%) of face value plus accrued interest; or after ninety-one (91) days after the date of issuance of this Note but not later than one hundred eighty (180) days in an amount equal to one hundred forty percent (140%) of face value plus accrued interest; or if on or after one hundred eighty-one (181) days from the date of issuance, upon the express written consent from Tangiers. The Company has provided Tangiers with 500,000 shares of New America as collateral for the Notes. 

Asher Enterprises Inc. (“Asher”)

On June 27, 2012, the Company entered into an agreement with Asher Enterprises, a Delaware corporation, an accredited investor, whereby Asher Enterprises loaned the Company the aggregate principal amount of $63,000, less $3,000 for legal related costs, together with interest at the rate of eight percent (8%) per annum, until the maturity date of March 27, 2013. The original issue discount note, as described in ASC 480-55, may not be prepaid in whole or in part. If the Note is not paid in full with interest on the maturity date, Asher has the right to convert this Note into restricted common shares of the Company. The Company at its option may elect to convert all or part of the principal and any accrued unpaid interest on these notes at any time or times on or before the maturity based on a conversion price. The conversion price (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower) shall equal to 58% multiplied by  the average of the three lowest closing prices during the ten (10) trading days prior to conversion notice.

The issued discount note was valued for $115,210, consists the principal amount of $63,000 and a discount of $45,621 which valued based on the 58% conversion rate. For the fiscal year ended July 31, 2012, $5,576 discount and $1,400 financing fee had been amortized and expensed.

The Company may prepay all or any portion of the aggregate principal amount and accrued interest within thirty (30) days of the date of execution of this Note, this Note may be prepaid in an amount equal to one hundred thirty percent (130%) of face value plus accrued interest; or after thirty-one (31) days after the execution of this Note but not later than sixty (60) days from the date of execution of this Note, this Note may be prepaid  in an amount  equal to  one  hundred thirty five percent  (135%)

 
F-14

 
FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 4 – Convertible notes payable (continued)

of  face  value plus accrued interest; or after sixty-one (61) days after the execution of this Note but not later than ninety (90) days from the date of execution of this Note, this Note may be prepaid  in an amount  equal to  one  hundred forty percent  (140%)  of  face  value plus accrued interest; or after ninety-one (91) days after the execution of this Note but not later than one hundred fifty (150) days from the date of execution of this Note, this Note may be prepaid  in an amount  equal to  one  hundred forty five percent  (145%)  of  face  value plus accrued interest; or after fifty-one (151) days after the execution of this Note but not later than one hundred eighty (180) days from the date of execution of this Note, this Note may be prepaid  in an amount  equal to  one  hundred fifty percent  (150%)  of  face  value plus accrued interest. After the expiration of one hundred eightieth (180) days following the date of the Note, the Company shall have no right of prepayment.
 
Under the covenant of the Note agreement, the Company shall not, without the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Company, except loans, credits or advances (a) in existence or committed on the date hereof and which the course of business or (c) not in excess of $100,000. An event of default occurs if the Company breaches any material covenant or other material term or condition contained in the Note Agreement and such breach continue for a period of ten (10) days after written notice thereof to the Company from Asher. The Company has advances $206,500 to a related party pertaining to an acquisition subsequent to July 31, 2012; however, the Company does not believe this is in breach of the covenant, nor has it received any written notice as of the date of this filing to this effect.
 
Denali Equity Croup LLC. (“Denali”)

On June 28, 2012, the Company entered into a Consulting Service Agreement with Denali Equity Group, LLC, a Nevada limited liability company, that in consideration of the service, the Company shall issue a convertible note of $135,000 to Denali. The Consulting Service Agreement has a term of two (2) years. During the fiscal year ended July 31, 2012, the Company recorded $22,500 in consulting expense, which leaving a prepaid expense balance of $112,500. The Convertible Note Agreement with Denali is for the principal amount of $135,000 with interest at the rate of eight percent (8%) per annum, until the maturity date of June 30, 2014. The original issue discount note, as described in ASC 480-55, may not be prepaid in whole or in part. If the Note is not paid in full with interest on the maturity date, Denali has the right to convert this Note into restricted common shares of the Company. The Company at its option may elect to convert all or part of the principal and any accrued unpaid interest on these notes at any time or times on or before the maturity based on a conversion price. The conversion price (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower) shall equal to 90% multiplied by  the average of the two lowest closing prices during the ten (10) trading days prior to conversion notice.

The issued discount note was valued for $150,000, consists the principal amount of $135,000 and a discount of $15,000 which valued based on the 90% conversion rate. For the fiscal year ended July 31, 2012, $625 discount had been amortized and expensed.

The Company may prepay all or any portion of the aggregate principal amount and accrued interest within ninety (90) days of the date of execution of this Note, this Note may be prepaid in an amount equal to one hundred ten percent (110%) of face value plus accrued interest; or after ninety-one (91) days after the execution of this Note but not later than one hundred eighty (180) days from the date of execution of this Note, this Note may be prepaid  in an amount  equal to  one  hundred twenty percent  (120%)  of  face  value plus accrued interest; or on or after one hundred eighty-one (181) days from the date of execution of this Note, this Note may be prepaid in an amount equal to one hundred twenty five percent (125%) of face value plus accrued interest.


 
F-15

 


FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 4 – Convertible notes payable (continued)

Tonaquint Inc. (“Tonaquint)

On July 19, 2012, the Company entered into an agreement with Tonaquint Inc., a Utah corporation, an accredited investor, whereby Tonaquint Inc. loaned the Company the aggregate principal amount of $85,000, less $2,500 for legal related costs and $7,500 fee to be paid to a third party, together with interest at the rate of eight percent (8%) per annum, until the maturity date of April 19, 2013. The original issue discount note, as described in ASC 480-55, may not be prepaid in whole or in part. If the Note is not paid in full with interest on the maturity date, Tonaquint has the right to convert this Note into restricted common shares of the Company. The Company at its option may elect to convert all or part of the principal and any accrued unpaid interest on these notes at any time or times on or before the maturity based on a conversion price. The conversion price (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower) shall equal to 65% multiplied by  the average of the two lowest closing prices during the ten (10) trading days prior to conversion notice.

The issued discount note was valued for $130,769, consists the principal amount of $85,000 and a discount of $45,769 which valued based on the 65% conversion rate. For the fiscal year ended July 31, 2012, $1,526 discount and $735 financing fee had been amortized and expensed.

The Company may be prepay prior to the maturity date by paying an amount equal to the outstanding principal of the Note multiplied by one hundred fifty (150%) percent together with accrued and unpaid interest thereon, upon the express written consent from Tonaquint. 

As of July 31, 2012, the Company had a balance of convertible notes payable of $704,775 net of unamortized discount of $163,055, and a balance of unamortized financing fee of $54,050. As of July 31, 2012, the Company had accrued and expensed $23,711 interest.

Note 5 – Loan payable

On December 24, 2009, the Company borrowed $200,000 from an unrelated third party under a promissory note. The loan was unsecured, bore interest at 10 percent per annum, and was due and payable on or before December 23, 2010. On February 1, 2010, the Company borrowed an additional $50,000 from the same third party lender, which amount was also unsecured, bore interest at 10 percent per annum, and was due on or before February 1, 2011. On December 23, 2010, the Company and the lender agreed to consolidate the principal amounts, as of December 24, 2010, into a single consolidated loan with the then accrued interest. The new consolidated loan was in the face amount of $250,000 plus $51,973 in accrued interest, unsecured, bore interest at 10 percent per annum, and was due on or before December 23, 2011.  On December 23, 2011, the combined principal and interest amounted to $301,973.

On January 9, 2012, effective December 23, 2011, the Company and the Lender agreed to convert the entire $301,973 principal and interest, based on the average closing price of the Borrower’s shares for the 10 trading days prior and up to the effective date of the conversion agreement, into restricted common stock of the Company.  The resultant quantity of shares amounted to 3,753,544 shares, which were issued in January 2012.
 
 
F-16

 


FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 6 – Related parties transactions

On May 3, 2010, the Company entered into a consulting agreement with Mr. John Hoak, wherein Mr. Hoak has agreed to provide, among other things, consulting services to the Company. The agreement was effective March 24, 2010 and continued to March 24, 2012. In consideration for agreeing to provide such consulting services, on May 3, 2010, we issued to Mr. Hoak 250,000 shares of our common stock valued at $187,500. During each period, a compensation expense was determined based on the number of days for which services were provided relative to 365 days, multiplied by the common stock valuation. This amount is deducted from the prepaid expense (initially $187,500 from the initial issuance) accordingly each period, which amount was $121,415 was recorded as consulting expense during the fiscal year ended July 31, 2011, leaving a prepaid expense balance of zero. As of March 24, 2011, Mr. Hoak remained as a director and the Company issued a further 250,000 shares on July 15, 2011 valued at $75,000. A total of $48,493 and $26,507 has been recognized during the fiscal years ended July 31, 2012 and 2011, respectively, in respect to the 250,000 shares of common stock. The agreement also contains a provision for the cash payment of $2,500 a month during the term of the agreement. Mr. Hoak has resigned as a director in March 2012. The Company has a payable to Mr. Hoak of $55,798 and $40,798 as of July 31, 2012 and 2011, respectively.

As of July 31, 2012, the Company has a payable of $46,100 to a former officer and Director of the Company, which consists of an outstanding loan amount to the Company of $9,910 and expenses paid by this former officer and Director on behalf of the Company a total of $36,190. The loan is unsecured, non-interest bearing, and has no specific terms for repayment.

On November 29, 2010, Mr. Don Nicholson was appointed as a member of the board of directors of the Company, and on December 28, 2010, effective January 1, 2011; Mr. Nicholson was appointed Chief Executive Officer, President, and Secretary-Treasurer. The Company entered into an agreement on July 2, 2011, effective November 15, 2010, with LTV International Holdings Ltd. (“LTV”), to provide management services to the Company over a two year period. The terms of which agreement required the issuance of 5,000,000 shares to LTV, issued on July 15, 2011 valued at $750,000, and a monthly fee of $2,500 payable to LTV. Mr. Don Nicholson is the designated service provider under the agreement with LTV. During each period, a compensation expense was determined based on the number of days for which services were provided relative to 365 days, multiplied by the common stock valuation. This amount is deducted from the prepaid expense (initially $750,000 from the initial issuance) accordingly each period. The Company has recorded a total of $375,000 and $262,625 as consulting expenses during the fiscal year ended July 31, 2012 and 2011, which leaving a prepaid expense balance of $109,375 and $484,375 as of July 31, 2012 and 2011, respectively. As of July 31, 2012, there are no outstanding amounts owing under this agreement.

On April 1, 2012, the Company entered into a consulting agreement with Mr. Robert B. Reynolds Jr., wherein Mr. Reynolds agreed to provide, among other things, services associated with performing duties associated with being a director of the Company. The agreement was effective April 1, 2012, and continues to March 30, 2013. In consideration for agreeing to provide such services, in April 2012, we issued to Mr. Reynolds 250,000 shares of our common stock, valued at $11,500. During each period, a compensation expense is determined based on the number of days for which services were provided relative to 365 days, multiplied by the common stock valuation. This amount is deducted from prepaid expense accordingly in each period, which amount of $3,813 was recorded as consulting expense during the fiscal year ended July 31, 2012, leaving a prepaid expense balance of $7,687.

Subsequent to July 31, 2012, on August 22, 2012, the Company entered into an agreement with Group8 Minerals, a Nevada Corporation ("Group8”), and Group8 Mining Innovations, a Nevada Corporation (“G8MI”), the sole Shareholder of Group8, whereby G8MI transferred 81% of the total issued and outstanding shares of Group8 in exchange for the issuance of 83,000,000 shares of the Company to G8MI. Sanning Management is the sole owner of G8MI. On June 12, 2012, the Company entered into a loan agreement with Sanning Management, Ltd., wherein Sanning Management agrees to loan a sum of $119,000 to the Company with interest at the rate of eight percent (8%) per annum, until the maturity date of June 12, 2014. As of July 31, 2012, the Company has a note payable to Sanning Management of $99,025.

 
F-17

 


FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 7 – Income Taxes

The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.

FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is $1,035,823 which is calculated by multiplying a 35% estimated tax rate by the cumulative net operating loss (NOL) adjusted for the following items:

For the period ended July 31,
 
2012
   
2011
 
Book loss for the year
  $ (1,092,712 )   $ (740,098 )
Adjustments:
               
   Exploration costs
    -       -  
   Non-deductible stock compensation
    470,745       493,277  
   Foreign currency gains
    1,744       -  
   Other differences
    252,500       -  
Tax loss for the year
    (367,723 )     (246,821 )
Estimated effective tax rate
    35 %     35 %
Deferred tax asset
  $ 128,703     $ 86,387  

The total valuation allowance is $233,835. Details for the last two periods are as follows:

For the period ended July 31,
 
2012
   
2011
 
Deferred tax asset
  $ 128,703     $ 86,387  
Valuation allowance
    (128,703 )     (86,387 )
Current taxes payable
    -       -  
Income tax expense
  $ -     $ -  

Below is a chart showing the estimated corporate federal net operating loss (NOL) and the year in which it will expire. The total NOL carry forward as of July 31, 2012 was $1,035,823 as itemized below:

Year
 
Amount
   
Expiration
 
2009
  $ 20,196       2029  
2010
  $ 345,237       2030  
2011
  $ 246,821       2031  
2012
  $ 367,723       2032  

Note 8 – Common stock

The Company is authorized to issue 540,000,000 shares of $.001 par value common stock. As of July 31, 2012 and 2011, 82,001,834 and 76,074,426 shares were issued and outstanding.

 
F-18

 


FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 8 – Common stock (continued)

On August 9, 2011, the Company signed a confidential term sheet in respect to the creation of a $3,000,000 Equity Line financing structure.  Pursuant to the term sheet, the Company paid a document preparation fee of $7,500, and issued a total of 136,364 shares valued at $15,000.  As of April 30, 2012, the Company has determined that it will not be proceeding with this transaction, and has expensed all costs accordingly.

On January 11, 2012, the Company entered into a 13 month agreement with an unrelated third party for the provision of non-exclusive financial advisor, investment bank and placement agent services to the Company.  Pursuant to this agreement, the Company was required to issue 350,000 shares, which were issued in January 2012, and valued at $24,675 of which $12,390 has been expensed during the fiscal year ended July 31, 2012, and leaving a prepaid expense balance of $12,285.

According to the Company’s Lithium Agreement with GeoXplor, detailed in Note 3 – Mineral Properties above, 250,000 shares valued at $16,250, were issuable on the second anniversary of the Agreement, December 24 2011, which shares were issued in January 2012.

Further to the Company’s Lithium Agreement with GeoXplor, detailed in Note 3 – Mineral Properties above, a cash payment of $100,000 was required on December 15, 2011. On January 6, 2012, effective December 15, 2011, GeoXplor agreed to defer the payment until March 15, 2012, in exchange for the issuance of 500,000 compensation shares (issued January 2012 valued at $37,450), and the further issuance of 500,000 shares (issued in January 2012 valued at $28,500) to be held by GeoXplor as security against the Payment. Upon fulfilling the Payment obligations within the extension, these security shares are to be returned to the Company for cancellation.  If the Company does not complete in full the Payment obligation before March 15, 2012, such shares may be sold by GeoXplor with the proceeds applied towards any remaining amounts owing.   If there are proceeds in excess of the amounts owing, the excess shall be applied as a pre-payment towards exploration work obligations under the Lithium Agreement. According to an agreement between GeoXplor and the Company signed subsequent to the end of the period (May 31, 2012), effective as of March 15, 2012, all rights and obligations under the original agreement were replaced by those in the new agreement. The additional 500,000 shares, issued in January 2012 valued at $28,500, were agreed to be retained by GeoXplor as compensation and revalued at the effective date of the new agreement, March 15, 2012, for a value of $26,250.

On December 24, 2009, the Company borrowed $200,000 from an unrelated third party under a promissory note. The loan was unsecured, bore interest at 10 percent per annum, and was due and payable on or before December 23, 2010. On February 1, 2010, the Company borrowed an additional $50,000 from the same third party lender, which amount was also unsecured, bore interest at 10 percent per annum, and was due on or before February 1, 2011. On December 23, 2010, the Company and the lender agreed to consolidate the principal amounts, as of December 24, 2010, into a single consolidated loan. The new consolidated loan is in the amount of $250,000 and is unsecured, bears interest at 10 percent per annum, and is due on or before December 23, 2011. On December 23, 2011, the combined principal and interest of the note amounted to $301,973. On January 9, 2012, effective December 23, 2011, the Company and the Lender agreed to convert the entire $301,973 principal and interest, based on the average closing price of the Borrower’s shares for the 10 trading days prior and up to the effective date of the conversion agreement, into restricted common stock of the Company.  The resultant quantity of shares amounted to 3,753,544 shares, which were issued in January 2012.

On December 16, 2011, the Company received a total of $15,000 from the proceeds of the sale of 187,500 shares of its common stock under a private placement agreement, priced at $0.08 / share, which shares were issued in January 2012.  The purchaser has received 187,500 warrants, each with the right to purchase a share at the price of $0.08/share, valid through to December 15, 2013.

On April 16, 2012, the Company issued 250,000 shares, according to the terms of a consulting agreement with Mr. Robert B. Reynolds Jr., valued at $0.046/share for a total valuation of $11,500.

 
F-19

 
FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2012 AND 2011

Note 9 –Marketable Securities and Investments

The following is a summary of available-for-sale marketable securities as of July 31, 2012 and 2011:

 
July 31, 2012
 
 
(i)
 
Cost
   
Unrealized
Gain
   
Comprehensive
(Losses)
   
Market or
Fair Value
 
Equity securities
    $ 250,000     $ -     $ (75,000 )   $ 175,000  
Total
    $ 250,000     $ -     $ (75,000 )   $ 175,000  

 
July 31, 2011
 
 
(ii)
 
Cost
   
Unrealized
Gain
   
Realized
(Losses)
   
Market or
Fair Value
 
Equity securities
    $ 250,000     $ -     $ (230,000 )   $ 20,000  
Total
    $ 250,000     $ -     $ (230,000 )   $ 20,000  

The Company classifies securities that have a readily determinable fair value and are not bought and not held principally for the purpose of selling them in the near term as securities available-for-sale, pursuant to FASB ASC 320-10, Investments-Debt & Equity Securities. Under FASB ASC 320-10, unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported in other comprehensive income until realized.

Note 10 – Subsequent Note

The Company entered into an agreement on August 22, 2012 with Group8 Minerals, a Nevada Corporation ("Group8”), and Group8 Mining Innovations, a Nevada Corporation (“G8MI” or “Seller”), the sole Shareholder of Group8, whereby G8MI transferred 81% of the total issued and outstanding shares of Group8 in exchange for the issuance of 83,000,000 shares of First Liberty to G8MI. The Company is further obligated to make a cash payment to G8MI in the amount of $100,000 on or before September 30, 2012, which amount has been paid in full, and by the way of loans to Group8 for property payments and exploration costs, i) $500,000 on or before October 30, 2012; ii)   $500,000 on or before December 31, 2012; iii)   $500,000 on or before February 28, 2013, and; iv)   $500,000 on or before April 30, 2013.  Group8 holds a fifty percent (50%) interest in and to certain Nevada limited liability companies, which hold interests in certain mining properties and milling operations in Nevada, pertaining to the mineral ore Stibnite (Antimony).  Approximately $149,000 has been provided as of the date of this filing towards the development obligations under the Agreement.

Tangiers Capital (as detailed in Note 4 – Convertible Debentures) has exercised its right to convert portions of its Secured Convertible Promissory Note dated February 23, 2012, as follows;

 
i.
Under the Conversion Notice dated September 6, 2012, Tangiers converted a portion of the debt equal to $5,000 in exchange for shares at a rate of $0.01628 per share, for a total of 307,125 shares.
 
ii.
Under the Conversion Notice dated September 20, 2012, Tangiers converted a portion of the debt equal to $10,000 in exchange for shares at a rate of $0.01658 per share, for a total of 603,318 shares.
 
iii.
Under the Conversion Notice dated October 24, 2012, Tangiers converted a portion of the debt equal to $15,000 in exchange for shares at a rate of $0.01673 per share, for a total of 896,593 shares.

As of the date of this filing, a total of $30,000 has been converted for a total issuance of 1,807,036 shares.


 
F-20

 


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

In the fiscal years ended July 31, 2012 and 2011, there have been no changes in the Company’s accounting policies, nor have there been any disagreements with our accountants.

ITEM 9A(T). CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, under supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e).  Based upon this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of July 31, 2012, because of the material weakness in our internal control over financial reporting (“ICFR”) described below, our disclosure controls and procedures were not effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that required information to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that required information to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 14d-14(f).  Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation.  In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of July 31, 2012.  In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.   Based on its assessment, management concluded that, as of July 31, 2012, our internal control over financial reporting was not effective and that material weaknesses in ICFR existed as more fully described below.

As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected.  In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of July 31, 2012:
 
 
1)
Lack of an independent audit committee or audit committee financial expert, and no independent directors.  We do not have any members of the Board who are independent directors and we do not have an audit committee.  These factors may be counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management;

 
23

 
 
 
2)
Inadequate staffing and supervision within our bookkeeping operations.  We have one consultant involved in bookkeeping functions, who provides two staff members.  The relatively small number of people who are responsible for bookkeeping functions and the fact that they are from the same firm of consultants prevents us from segregating duties within our internal control system.  The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. This may result in a failure to detect errors in spreadsheets, calculations or assumptions used to compile the financial statements and related disclosures as filed with the SEC;
 
 
3)
Outsourcing of our accounting operations.  Because there are no employees in our administration, we have outsourced all of our accounting functions to an independent firm.  The employees of this firm are managed by supervisors within the firm and are not answerable to the Company’s management.  This is a material weakness because it could result in a disjunction between the accounting policies adopted by our Board of Directors and the accounting practices applied by the independent firm;
 
 
4)
Insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements;
 
 
5)
Ineffective controls over period end financial disclosure and reporting processes.

Management's Remediation Initiatives

As of July 31, 2012, management assessed the effectiveness of our internal control over financial reporting.  Based on that evaluation, it was concluded that during the period covered by this report, the internal controls and procedures were not effective due to deficiencies that existed in the design or operation of our internal controls over financial reporting.  However, management believes these weaknesses did not have an effect on our financial results.  During the course of their evaluation, we did not discover any fraud involving management or any other personnel who played a significant role in our disclosure controls and procedures or internal controls over financial reporting.

Due to a lack of financial and personnel resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses.  We will not be able to do so until, if ever, we acquire sufficient financing and staff to do so.  We will implement further controls as circumstances, cash flow, and working capital permits.  Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 10-K for the period ended July 31, 2012, fairly presents our financial position, results of operations, and cash flows for the periods covered, as identified, in all material respects.

Management believes that the material weaknesses set forth above were the result of the scale of our operations and intrinsic to our small size.  Management also believes that these weaknesses did not have an effect on our financial results.

We are committed to improving our financial organization.   As part of this commitment, we will, as soon as funds are available to the Company (1) appoint outside directors to our board of directors sufficient to form an audit committee and who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create a position to segregate duties consistent with control objectives and to increase our personnel resources.  We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary, and as funds allow.

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

During the period covered by this report, there were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.  OTHER INFORMATION

None.

 
24

 
PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Executive Officer and Directors

Our officers and Directors and their ages and positions are as follows:

Name
Age
Position
Appointment
Don Nicholson
45
Director
Nov 29, 2010
Don Nicholson
 
CEO, President, Secretary, Treasurer
Jan 1, 2011
Robert Reynolds
57
Director
April 2, 2012
John Rud (1)
72
Vice President Exploration
Mar 1, 2010 – Nov 1, 2011
John Hoak(2)
60
Director
May 3, 2010 – April 1, 2012
 
 
(1)
Mr Rud resigned as VP Exploration on November 1, 2011.
 
 
(2)
Mr Hoak’s appointment of director expired April 1, 2012 while Robert Reynolds was appointed in his place.

Mr. Don Nicholson, President, Secretary, Treasurer, Director

Mr. Nicholson has over 20 years of international experience in all phases of project development and management, including incubation, implementation and growth, covering several business sectors including manufacturing, resource extraction, education, construction, real estate, and high-technology. From December 2008 to date, Mr. Nicholson has been involved in the provision of consulting services to public and private companies in areas such as business development, operational guidance, and administrative. Previously, from April 2005 to December 2008, Mr. Nicholson was a director and officer of Terra Nostra Resources Corp., a US public company involved in the development of metals refining operations in China, where he was involved in various senior level management roles. From May 2002 to March 2005, Mr. Nicholson was the Vice President of Operations for a European bicycle manufacturer based in Greece, B-Tech SA, where he was responsible for logistics and production management, and business process re-engineering to further the technological evolution of the company. Mr. Nicholson graduated from the University of British Columbia in 1991 with a Bachelor of Commerce degree. Mr. Nicholson is presently an officer and director Pepper Rock Resources Corp, a US reporting issuer.

Mr. Robert B. Reynolds Jr., Director

Mr. Reynolds had a 31-year career at the Ford Motor Company’s Buffalo Stamping Plant, where as a Journeyman Machine Repairman he headed-up repair projects that involved millions of dollars and required extensive planning and cost control methods. During this time, he was vigorously involved in the United Auto Workers (UAW) Union and at his retirement, Mr. Reynolds ended his union career as Vice President of UAW 897.  During his union involvement years, Mr. Reynolds participated in both local and national negotiations for the UAW.  Starting in 2002, Mr. Reynolds assumed the duties as the Buffalo Stamping Plant hourly coordinator of the “Ford Total Preventative Maintenance” program (FTPM) which included both, local and corporate accountability and responsibilities for all machine and building maintenance. In 2004, Mr. Reynolds was elected to the Hamburg Central School Board, thereby governing a $50 million dollar yearly school budget and actively pursued the State Education Department for enhancements for the school districts.  In 2006, Mr. Reynolds ran for and was elected to the Erie County Legislature and in 2007, retired from Ford Motor Company. As a County Legislator, he was nominated to the chairmanship of the finance and management committee where he administered the county’s $1 billion plus budget for the next 4 years.  In addition, during his time in the legislature, Mr. Reynolds also served on the Cornell Cooperative Extension Board of Directors and the Erie County Soil, Water and Conservation Board of Directors. His major role was overseeing their million dollar budgets and the future planning and expansion for the organizations.  Mr. Reynolds also served as chairman of the Erie County Farmland Protection Board and was appointed to the New York State Governor’s Agricultural Advisory Council in 2008.  Since 1999, he has served as Vice President of United Council Taxpayers Association and recently became Secretary of the Scranton/McKinley Taxpayers Association both, non-profit organizations in the Buffalo, NY area.  Mr. Reynolds graduated from Genesse Community College in 1974 with an Associate of Science degree.  Currently, he is employed at the Board of Elections for the County of Erie.  Mr. Reynolds does not presently serve as a director for any other public companies.
 
25

 
Mr. John Rud, Former Vice President Exploration

John Rud has amassed over 50 years of experience in identifying, exploring and processing a wide variety of mineral deposits. Mr. Rud holds a Bachelor of Science degree and a Master of Science degree in Geology from the University of Oregon. For the past five years, he has concentrated on uranium properties and production. His lifelong experience in all aspects of putting mining properties in production makes him a unique Company resource.

Formerly employed at AZCO Mica, Inc., where he served as a marketing director, Mr. Rud was responsible for the design and construction of a wet-ground mica plant. Along with hiring all personnel and contractors, he oversaw equipment procurement and supervised all corporate marketing activities.

Mr. Rud is also the former president and director of Gentry Steel Inc., a position that required him to govern day-to-day operations of the public listed company. The corporation is presently completing the mine permitting, the purchasing of land for the processing plant, and procuring the mining and processing equipment for a 30-million pound per year high-grade iron oxide pigment operation. A brief summary of Mr. Rud's recent mine development experience is as follows:

 
·
Marketing Director (AZCO Mica, Inc.) Responsible for the design and construction of a wet ground mica plant. Hired all personnel and contractors. Procurement of equipment. Supervised all marketing activities regarding the wet ground mica product. Mill currently in operation and producing a wet ground mica product.
 
·
President/Director (Gentry Steel Inc.) Responsible for managing the day-to-day operations of the public company. Company is presently completing the mine permitting, purchasing land for the processing plant, and procuring the mining and processing equipment for a 30 million pound per year high-grade iron oxide pigment operation.
 
·
President/Geologist (Aimco Consolidated) Supervised geological mapping of the Gentry Iron Ore Deposit. Supervised Core drilling program to delineated ore reserves. Completed a feasibility program to determine the economic merits of the iron ore deposit.
 
·
Geologist Located and evaluated a porphyry copper deposit in the Picacho Mountain, Pinal County, AZ. Leased property to Cyprus Metals Corporation.
 
·
Geological Consultant Designed and constructed a 24 TPD portable column flotation plant. The portable plant was equipped with fine ore feeder, grinding circuit, computer controlled flotation column, drying and bagging facilities.

John Hoak, Former Director

Mr. Hoak has 30 years of diversified experience in construction, oil & gas and minerals development and underground mining and drilling operations.  He is a founder, Chief Executive Officer and Executive Director of New Era Petroleum, LLC of Sheridan, Wyoming. He was a founder and Executive Director of Rock Well Petroleum, serving as Chief Operating Officer and then as Chief Executive Officer. He was Managing Partner of Mine Management Services, LLC, in Bozeman, Montana; Vice President, Operations of Oil Recovery Enhancement LLC, Bozeman, Montana; Managing Partner of the Jardine Group LLC, Gardiner, Montana; Senior Operations & Environmental Officer and Mine General Manager at the Mineral Hill Mine, Jardine, Montana. Mr. Hoak received a B.Sc in Environmental studies (Magna Cum Laude, Departmental Research Honors) from Allegheny College in Meadville, Pennsylvania.

Committees of the Board of Directors

To date, our Board of Directors has not established a nominating and governance committee, a compensation committee, nor an audit committee
 
 
26

 
Code of Ethics

We currently do not have a Code of Ethics.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our Directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock.  Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.

Based on a review of Forms 3, 4, and 5 and amendments thereto furnished to the registrant during its most recent fiscal year ending July 31, 2012, the following represents each person who did not file on a timely basis reports required by Section 16(a) of the Exchange Act:

Name
Reporting Person
Form 3/# of transactions
Form 4/# of transactions
Form 5/# of transactions
John Hoak
Director
1
1
-
John Rud
Vice President, Exploration
1
1
-
Don Nicholson
CEO, President and Director
1
1
-

ITEM 11.  EXECUTIVE COMPENSATION.

The particulars of compensation paid to the following persons during the fiscal period ended July 31, 2012 and 2011 are set out in the summary compensation table below:

 
·
our Chief Executive Officer (Principal Executive Officer);
 
·
our Chief Financial Officer (Principal Financial Officer);
 
·
each of our three most highly compensated executive officers, other than the Principal Executive Officer and the Principal Financial Officer, who were serving as executive officers at the end of the fiscal year ended July 31, 2011;
 
·
up to two additional individuals for whom disclosure would have been provided under the item above but for the fact that the individual was not serving as our executive officer at the end of the fiscal year ended July 31, 2011;
    (Collectively, the “Named Executive Officers”):

SUMMARY COMPENSATION TABLE
Name
Fiscal Year Ended July 31,
Salary
($)
Bonus
($)
Stock Awards
($)
Option Awards
($)
Non-Equity Incentive Plan Compensation
($)
Nonqualified Deferred Compensation Earnings
($)
All Other Compensation
($)
Total
($)
Don Nicholson  (1)
2012
$36,000
0
$375,000
0
0
0
0
$411,000
John Rud (3)
2012
0
0
$16,048
0
0
0
0
$16,048
Don Nicholson  (1)
2011
$17,500
0
$434,375
0
0
0
0
$451,875
Glyn Garner (2)
2011
$25,000
0
0
0
0
0
0
$25,000
John Rud (3)
2011
0
0
$79,731
0
0
0
0
$79,731

 
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(1)
Mr.Nicholson has been our Principal Executive and Financial Officer since January 1, 2011.  Mr. Nicholson’s services are provided to the Company through an Executive Services contract with LTV International Holdings Ltd, therefore Mr. Nicholson is not directly compensated by the Company.  According to the terms of the contract, in order to obtain and retain the provision of these services, an amount of $2,500 / month is payable, and a one-time issuance of 5,000,000 shares to LTV International or assigns was required (issued July 15, 2011).
 
(2)
Mr. Garner resigned as our President and a Director on January 1, 2011.
 
(3)
John Rud has held the position of Vice President, Exploration, since Mar 1, 2010.  As part of Mr. Rud’s consulting contract commencing March 1, 2010, and as extended for a further year on Mar 1, 2011, he was issued a total of 500,000 shares, of which the earned value has been included in the above table, with a total of 145,889 remaining to be earned up to the expiry of the contract on February 28, 2012. Mr. Rud retired on November 1, 2011
 
(4)
Robert Reynolds has held the position of director, since April 2, 2012.  As part of Mr. Reynolds consulting contract commencing April 1, 2012, he was issued a total of 250,000 shares, of which the earned value has been included in the above table, with a total of $7,687  remaining to be earned up to the expiry of the contract on April 1, 2013.

Outstanding Equity Awards at Fiscal Year-End
 
None

Option Grants and Exercises

There were no option grants or exercises by any of the executive officers named in the Summary Compensation Table above.

Employment Agreements

We have not entered into employment agreements with our Directors and officers.

In order to undertake the operations of the Company, the Company has entered into consulting agreements with individuals to provide required services to the Company, with the particulars as follows.

 
·
On March 1, 2010, the Company entered into a consulting agreement with Mr. John Rud, wherein Mr. Rud has agreed to provide, among other things, consulting services to the Company for a period of 12 months.  By mutual consent, this agreement was extended for an additional year under the same terms and conditions.
 
·
On May 3, 2010, we entered into a consulting agreement with Mr. John Hoak, wherein Mr. Hoak has agreed to provide, among other things, consulting services to the Company. The agreement was effective March 24, 2010 and continues to March 24, 2012. Mr. Hoak has resigned as a director in March 2012.
 
·
On December 4, 2009, Mr. Glynn Garner was appointed President, Secretary, Treasurer, and a member of the board of directors of the Company.  Mr. Garner did not enter into any formal employment or consulting agreement at the time.  Mr. Garner resigned all of his officer and director positions on December 28, 2010, effective January 1, 2011.
 
·
On November 29, 2010, Mr. Don Nicholson was appointed as a member of the board of directors of the Company, and on December 28, 2010, effective January 1, 2011, Mr. Nicholson was appointed Chief Executive Officer, President, and Secretary-Treasurer.   The services of Mr. Nicholson are provided to the Company under an agreement entered into on July 2, 2011, effective November 15, 2010.
 
·
On April 1, 2012, the Company entered into a consulting agreement with Mr. Robert Reynolds, wherein Mr. Reynolds has agreed to provide, among other things, consulting services to the Company for a period of 12 months.  Mr. Reynolds was appointed as a member of the board of directors of the Company on April 2, 2012.

 
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Compensation of Directors

Name
Fees Earned or Paid in Cash
($)
Stock Awards
($)
Option Awards
($)
All Other Compensation
($)
Total
($)
Don Nicholson (1)
-0-
-0-